The long-running and bitter legal fight for control of the $4 billion family trust WA mining baron Lang Hancock left for his grandchildren, which was controlled by Australia’s richest person, Gina Rinehart, ended in the NSW Supreme Court this afternoon with Rinehart’s eldest daughter, Bianca being appointed the new trustee of the Hope Margaret Hancock Trust.
The trust holds 24% of Gina Rinehart’s Hancock Prospecting.
Bianca and her brother John Hancock took their mother – today reaffirmed as No.1 on the BRW Rich List with an estimated wealth of $14 billion – to court, accusing her of acting inappropriately in her role as trustee.
The pair claimed Gina acted inappropriately when she changed the date the trust was due to vest without telling them. She argued the trust would have otherwise been subject to capital gains tax which would have left her children bankrupt.
The trust was originally due to vest in 2011 when the youngest child, Ginia, turned 25. Rinehart used advice from PricewaterhouseCoopers to warn them it could lead to tax problems, wanting them to extend the vesting date, but the letter was described as “sanitised” version of the actual advice that over-emphasised the liability. And the children were unaware she had already extended the vesting date to 2068, when her eldest child, John, would be 92.
During nearly four years of argument and negotiations, Ginia sided with her mother against her half-siblings. Rinehart’s other child, Hope Welker, remained “neutral” in the legal battle after initially siding with the Hancocks, then withdrawing.
Gina Rinehart has four children from two marriages. She agreed to withdraw as trustee in late 2013, but the battle continued over who would lead the family trust. She wanted an independent trustee, while Hancock backed his sister for the role. After neither side could agree, the matter went to the NSW Supreme Court.
An acrimonious family battle to rival the 80s TV show Dallas ensued. The Hancock children claimed their mother tried to bully and intimidate them to sign away their rights.
Gina accused Bianca of leaking confidential company documents to her brother, in breach of a range of three separate confidentiality agreements. And email exchanges between the family were aired in court, including one in which Ginia encouraged Hope to take some money that their mother was offering. “Not that you deserve a penny as you have never worked a day in your life,” the email said, “but if you cannot live with 300 million dollars for doing absolutely nothing, then you really are disgusting.”
In his summary, Justice Paul Brereton, said Rinehart had exerted “enormous pressure and great influence” and “gone to extraordinary lengths” in her bid to maintain control over the trust.
He rejected the billionaire’s arguments against her daughter taking control.
“The balance of the weight of the beneficiaries’ wishes favours the appointment of Bianca,” he said. “The Court concluded that Bianca was better-suited than any of the alternatives to administer this trust in the prevailing circumstances.”
He said it was a reasonable inference that she would try to influence any trustee who tried to move against her interests.
But the Hancock children did not get everything their own way, with Justice Brereton dismissing claims that amendments to the constitution of the family company, Hancock Prospecting Pty Ltd (HPPL), made in 2006 were a “poison pill” preventing the children from getting a distribution of their shares in Hancock Prospecting.
Justice Brereton said the amendments were not improperly agreed to by Gina Rinehart and thus not void.
“The Court concluded that it had not been established that, in consenting on behalf of the Trust to the 2006 Amendments, Mrs Rinehart acted in breach of trust or for an improper or extraneous purpose, and so the Trust is bound by the 2006 Amendments in respect of its shareholding in HPPL,” he said.
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