Rinehart ordered to pay hundreds of millions to rival mining family

The heirs of iron ore pioneer Peter Wright have claimed victory in their decades-long legal battle against Gina Rinehart’s mining company, with a Supreme Court judge ruling the spoils from a lucrative iron ore project in Western Australia’s Pilbara must be shared with their family company.

Justice Jennifer Smith on Wednesday morning ruled that Wright Prospecting was entitled to half of the historical royalties from the Hope Downs mines, estimated to be worth hundreds of millions, with more to flow.

However, in her judgment, Smith called the decision only a “half-win” as she rejected Wright Prospecting’s claim for part ownership of another portion of the mining project, letting Rinehart keep her place as the country’s wealthiest person with an estimated fortune of $38 billion.

The sprawling legal fight is far from over. There will be further hearings to determine whether the Wrights will get the nearly $1 billion their camp is hoping for, or a $14 million annual payment Rinehart’s company says it owes.

And even though Smith rejected claims by Rinehart’s eldest children that they were the rightful owners of Hope Downs via a trust established by their grandfather, Lang Hancock, the family remain locked in private arbitration.

After the decision was handed down, Rinehart’s son, John Hancock, issued a lengthy statement that included a plea for unity.

“I hope we can finally put these events from decades ago behind us, and as a united family, celebrate and continue the contribution we have made to Australia,” he said, just as a Rinehart’s company Hancock Prospecting released its own statement emphasising how Smith had dismissed her son’s claims. “Justice Smith’s decision… rejected John and Bianca’s ownership claims,” said Hancock Prospecting executive director Jay Newby.

The Supreme Court case, one of the longest and most expensive in Australian history, pitted the nation’s richest person against the descendants of her father Lang Hancock’s business partner, as well as members of her own family.

Wright’s heirs, which include billionaire Angela Bennett and her nieces, Leonie Baldock and Alexandra Burt, argued that their family company was entitled to a 1.25 per cent royalty from the Hope Downs iron ore mines in WA’s Pilbara region.

Hancock Prospecting runs the lucrative mines with the mining giant Rio Tinto.

The tenements were first pegged by Hancock and Wright in the 1940s, and in 1982, the iron ore pioneers nutted out an agreement to divide the assets that was intended to prevent their descendants from arguing over ownership in the future.

Despite their efforts, the assets have sparked more than a decade of courtroom warfare by the descendants.

The tenements at the centre of the dispute were seized by the state government but were reinstated to Hancock Prospecting after Wright died.

Wright’s descendants argued the tenements were still part of the partnership agreement hashed out by Wright and Hancock in the 1980s and that they were entitled to a share of equity and royalties.

DFD Rhodes, the company founded by Hancock and Wright’s former business partner Don Rhodes, also sought royalties from the project, and was partially successful in Wednesday’s decision.

While it failed to prove it had a contractual right to royalties under a 1969 agreement, the judge decided it still deserved to receive money based on general legal fairness.

The court ruled that Hancock Prospecting’s joint venture partner, Rio Tinto, would be jointly liable to contribute to the costs now payable to the Wright and Rhodes families.

What those costs will be remains unknown, with the Wright’s camp claiming it to be up to $900 million, and Hancock Prospecting saying its $14 million for each year the mine has been returning royalties.

A royalties trial will be held at a later date.

In a statement, Hancock Prospecting executive director Jay Newby said the court’s decision had confirmed the company’s rightful ownership of the mines.

“The primary issue in these proceedings is ownership of the Hope Downs and East Angelas tenements,” he said.

“HPPL welcomes the WA Supreme Court decision which decisively confirms HPPL’s rightful ownership of these tenements firmly rejecting the baseless ownership claims of John, Bianca and Wright Prospecting Pty Ltd in their entirety.

“Justice Smith’s decision, which rejected John and Bianca’s ownership claims over the Hope Downs and East Angelas tenements, demonstrates ... earlier media reports, including wrongful assertions of fraud in relation to the ownership of Hope Downs and East Angelas, are plainly wrong.

“The court found that these tenements belong to HPPL exclusively.”

In a statement, John Hancock said he and his sister Bianca did not expect to gain anything from Wednesday’s judgment.

“For many difficult years in the mid-1990s and early 2000s, I stood by my mother’s side as she defended the validity of the June 1988 Agreement in court, and our family company, from a multitude of litigation concerning Rose Porteous,” he said.

“I supported my mother during the inquest into my grandfather’s death. Interspersed during those difficult years were happier times of travelling with her, starting in 1993 with visits to China and later in my role at Hancock Prospecting on worldwide marketing missions for the Hope Downs project.

“At some point after the Porteous litigation was settled in 2003, Gina changed her mind and argued the June 88 Agreement was not binding, and that she was not trustee of the HFMF trust.

“When I asked her about the changes in company ownership, my mother terminated my employment at Hancock Prospecting and I had to find other employment and income.

“As a young man, with little access to documentation and no wealth to provide a small fraction of the extensive legal team I have constantly been up against, it was (and has since joined by my sister Bianca) an incredibly difficult fight for fairness.”

Wright Prospecting said it was pleased with the outcome of the case, with both major parties claiming the decision as a win.

“Wright Prospecting commenced this action to recover our share of royalties from the Hope Downs 1 - 3 mines,” a spokesman said.

“That claim has been upheld.

“WPPL also sought either a proprietary interest or a royalty in the Hope Downs 4 - 6 mines and has been successful in its royalty claim.

“These proceedings were commenced in 2010 and, after many delays, we are pleased to finally receive a result in our favour. The decision is lengthy and complex.”

The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.