Trust in Rinehart justice

The dispute between Gina Rinehart and her children raises key issues about the role and accountability of family trustees.

The dispute between Australia’s richest person, Gina Rinehart, and her children is more than a private squabble between relatives.

The high profile of the litigants meant the case was always going to attract media interest, especially since the High Court last week lifted a suppression order in place since September last year.

But so far, the media have been distracted by the personal issues at play, and practically ignored the important judicial ones. From a justice perspective, Rinehart’s wealth and significant influence should be irrelevant, against the broader backdrop of allegations of serious misconduct by a trustee.

The case so far…

The dispute revolves around a family trust, of which Rinehart is the trustee, and her four children are the beneficiaries.

The trust has been estimated to be worth about $1.12 billion to each of the four children. As well as being the trustee, Rinehart holds a 17.7 per cent share of the trust, which overall holds 23.4 per cent of Hancock Prospecting.

In September 2011, shortly before the trust was due to vest, Rinehart sought to vary its terms, preventing the beneficiaries from gaining control of their shares, instead extending her role as trustee for a further 56 years.

Her reason for doing this is alleged to be a predicted capital gains tax liability of $142 million in case the trust vests. More recent media reporting suggests it is because she doesn’t think the children are fit to manage the trust.

On September 5, Rinehart’s children sought an interim order preventing her from changing the terms of the trust deed, including the key dates. The order was granted, but could not be implemented, because the deed had already been altered.

Rinehart then applied to have the proceedings suspended, because of an agreement between her and the children that disputes arising under the trust should be resolved by confidential mediation and arbitration before litigation.

This agreement arose after a previous dispute between family members. Her legal advisors argued that a suppression order was required to protect the confidentiality of the subject matter of the dispute, otherwise the mediation and arbitration processes agreed to would be pointless.

Debate over the suppression order has been the subject of more recent instalments in this litigation, with media interests strenuously opposing it. Up until last week’s decision by the High Court, the suppression order granted on 9 September remained in place.

Justice for the rich

So far the case has consumed a remarkable amount of court and legal resources, from the NSW Supreme Court through to the High Court, in a very short time. This is a luxury many waiting for a court date would envy, especially those waiting in less comfortable circumstances such as prison or detention centres.

If justice delayed is justice denied, then this will be the most just outcome of any court case ever heard in Australian history – and it’s far from over yet.

Since the suppression order was lifted, more information about the dispute, including the allegations against Rinehart by her children and the parties' views of one another, is being shared with the public via the media. Some of the allegations, which have not been tested in court, pose serious questions about compliance with Australian law.

It is not entirely clear whether the agreement about confidential mediation and arbitration even applies to this particular dispute. The judge who heard the original interim application thought it did, but then in a later hearing changed his view, and said he thought it didn’t.

The extensive media coverage the litigation has received will undoubtedly be present in the mind of any arbitrator or judge who considers this question in future.

Trusting the trustee

The dispute raises key issues including access to justice and court resources, openness of the courts, privacy, the accountability of trustees, and the ability of the courts to be excluded from hearing disputes by agreement.

Rinehart’s conduct as a trustee is at the heart of the conflict. It is publicly significant because serious accusations, including allegations of deceit and gross dishonesty, have been made.

The role of trustee, by definition, carries with it an implication of trust – if Rinehart’s children, beneficiaries in whose interests she is obliged to act under law, feel unable to trust her, it is an issue that should be addressed before the courts. This should occur irrespective of the influence she exercises over media, mining, and political interests.

Wendy Bonython has written about supression orders, contracts, privacy and other matters. She is currently researching questions of confidentiality and privacy in Australian and overseas law.
This story first appeared on The Conversation. Reproduced with permission.

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