Tuesday 28 January 2020

World's richest woman loses €3.2bn legal battle with 'lazy kids'

Jane Wardell Sydney

Gina Rinehart, the world's richest woman, has lost a legal battle against three of her four children over control of the family's Aus$4bn (€3.2bn) trust.

The fund was set up 20 years ago by her late father, the mining magnate Lang Hancock. Another child, Ginia Rinehart, the youngest of the four, has sided with her mother in the dispute.

The protracted and highly charged legal battle has resulted in the release of private emails detailing the torrid dispute between Mrs Rinehart and her children.

Trustee

Justice Paul Brereton of the New South Wales Supreme Court ruled that the case should now go to a full trial at a date yet to be determined.

Mrs Rinehart's three eldest children are seeking to remove her as the sole trustee of the fund that has an almost one-quarter share in one of the world's largest privately owned mining companies, Hancock Prospecting Pty Ltd.

The case has captured public attention in Australia as it revealed details of the private life of Mrs Rinehart, the only child of Lang Hancock, a household name after being credited with discovering the world's largest deposit of iron ore in Pilbara, Western Australia.

Mrs Rinehart had tried unsuccessfully to have the hearings held behind close doors after her three elder children -- Hope Rinehart Welker, Bianca Rinehart and John Hancock -- accused her of serious misconduct in her role as trustee.

In return, family emails made public as part of the case showed Mrs Rinehart describing the three as lazy and spoilt.

The trio argued that Mrs Rinehart was unfit to be a trustee after she extended the trust's vesting date to 2068, into their 80s and 90s, claiming they would face "catastrophic financial consequences" from tax dues.

After the lawsuit was launched last September, Mrs Rinehart changed her mind and vested the trust this April, which involved giving up some of her discretionary powers in the process.

She argued that meant the case should be thrown out, claiming the children's case was frivolous and an abuse of process given they could now call on their share at any time.

But the judge ruled that she was still in control of the trust, holding the shares as trustee and retaining such powers as the ability to distribute its income and to sell property and reinvest the proceeds.

Justice Brereton said it was possible that Mrs Rinehart, who has a long history of fighting bitter battles through the courts, could "seek to extract some concession or benefit" if the children sought to take their shares.

Justice Brereton noted that to throw out the case he would have to find its prospects "hopeless" or "doomed to fail".

Impact

The children do not want the trust funds paid out, but want their mother replaced as the trustee. It is not clear what impact, if any, the removal of Mrs Rinehart as trustee would have on Hancock Prospecting and its empire.

Shares in the company can only be held by Mrs Rinehart and her direct descendants and cannot be pledged as collateral against borrowings.

The judge also allowed the three children to enter amendments to the original lawsuit to bring in actions by their mother since the case was filed in September last year.

However, he denied a bid by the children to seek compensation on the grounds Mrs Rinehart's decision to vest the trust had exposed them to tax risks, saying such a claim was "vexatious and embarrassing".

Brereton will hear arguments on costs on November 7. No date was set for the full trial.

Irish Independent

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