Rinehart has small court win
The country's richest person, Gina Rinehart, scored a personal victory in the NSW Supreme Court on Tuesday when her estranged daughter Hope officially withdrew from legal action and flipped from plaintiff to defendant in the family legal battle.
It is the latest twist in a family saga that erupted in the courts in September 2011 when three of Rinehart's four children - Hope, John and Bianca - sought to remove her as trustee alleging "deceptive, manipulative and disgraceful conduct".
To outsiders, the family feud came as a shock, but to insiders it had been a long time coming - ironically over what the children believe is their rightful inheritance: just as Rinehart battled her father over Hancock Prospecting.
It is a feud that has become the subject of huge publicity and controversy as the inner relationships of a complex family come to light. It is now set to become a TV miniseries.
The legal action erupted shortly after each of Gina's four children received a four-page letter from their mother three days before the family trust, worth billions of dollars, was set to vest on September 6, 2011. The letter, which was filed to the NSW Supreme Court, warned them they could face bankruptcy due to "substantial" capital gains taxes if they went ahead and allowed the trust to vest.
It said the dividends that the trust would begin paying from January 2012 would not cover the capital gains tax should the trust vest: "Indeed many years of dividends would not be sufficient to pay the CGT that would become due if the trust vested. The restrictions of bankruptcy (including in the case of a bankrupt person, lack of ability to hold directorships, lack of ability to obtain credit, difficulty with insurances, restrictions on management positions (if obtainable), not able to travel outside the country without permission from the court appointed designate in bankruptcy, etc, and very low income), would hence be a lengthy process over many years, disrupting your life."
An affidavit filed in the court on Tuesday by Rinehart's lawyer, Paul McCann, includes a series of emails that shows yet another angle on the family feud.
The emails show that John Hancock tried to reach a confidential settlement with his mother rather than go the expensive route of legal action.
Emails sent from John to his mother and her lieutenants at Hancock Prospecting indicate he was prepared to make a deal that would include extending the vesting date of the trust by 10 years. He wrote in an email dated September 3, 2011: "This will allow the important GHR [Gina Hope Rinehart] 'guidance' for the younger siblings for an extra 10 years, 10 years that I have had the 'benefit' of."
In a statement John confirmed he tried to reach a settlement with his mother before lawyers were involved. "Yes, I tried to sort out a settlement with GHR [Gina Hope Rinehart] before lawyers were involved- I didn't think they [the girls] would successfully mount a challenge or last the distance, in the days after the trustee sent the bankruptcy letter. It was a surprise to me when I found out Hope had engaged lawyers and was on the steps to the NSW Court. When B [Bianca] phoned me, she said I was the last of the kids to 'get on board'. Once I did, any deals I was discussing with GHR were off."
He went on to say: "By the way, if she had done a settlement with me then it would've been much cheaper and easier than anything I'd contemplate now." Legal costs are estimated to be $100,000 a month.
Hope might have settled with her mother and officially withdrawn from the legal action but it is unlikely to mean she will be taking sides or be represented at the next court hearing next month.
Due to a quirk in the law, Hope needs to be named a defendant because she is no longer a plaintiff in the case to remove Gina Rinehart as trustee of the family trust which she and two of her siblings launched in September 2011.
Nevertheless it means that three have now become two in the legal action.
John said: "We now want to press on and look forward to disclosure of the documents that reveal the past administration of the trust and know why no distribution has been made. The trustee has previously declined, citing tax contingencies - channelling the power of the ATO once again - the tax returns for 2012 are now due and we expect a distribution."