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Rinehart Allowed Mediation After Arbitration Bid Rejected

Hancock Prospecting Chairwoman Gina Rinehart
Gina Rinehart, chairwoman of Hancock Prospecting Pty. Photographer: Ron D'Raine/Bloomberg

Sept. 18 (Bloomberg) -- Gina Rinehart, after failing to persuade an Australian judge to have a family dispute over a multibillion-dollar trust resolved by an arbitrator, won her bid for a final mediation attempt.

Supreme Court Justice Patricia Bergin in Sydney today dismissed Rinehart’s bid to stop the trial and refer the dispute to arbitration. Bergin granted Rinehart’s request for mediation, to be held before Sept. 26, and if the dispute isn’t resolved the judge scheduled a five-day trial to start Oct. 8, a week later than originally planned.

John Hancock, Rinehart’s only son, and her eldest daughter Bianca sued to remove their mother from managing a family trust, claiming she breached her duty, failed to act honestly and has a conflict of interest. Rinehart’s removal would mean she would relinquish ownership of shares in Hancock Prospecting Pty held by the trust.

The Hope Margaret Hancock Trust, created by Rinehart’s father Lang Hancock for the benefit of his grandchildren, holds 23.5 percent of shares in Hancock Prospecting. The company owns stakes in some of the biggest iron mines in Australia and collects royalties from Rio Tinto Group operations.

Rinehart is the world’s 38th richest person with a net worth of $19 billion, according to the Bloomberg Billionaires Index, with Hancock Prospecting accounting for most of her wealth.

Trial Preparation

Bruce McClintock, Rinehart’s lawyer, said at the hearing no oral evidence would be given at trial, indicating that Rinehart won’t have to testify.

Christopher Withers, John Hancock’s lawyer, said he didn’t object to mediation as long as it occurs in parallel with trial preparation. McClintock proposed three days of mediation to be held from Sept. 23 to Sept. 25.

Rinehart sought to extend her control of the trust to 2068 in September 2011, warning her children the taxes they would incur if they took possession of the shares would bankrupt them.

John Hancock today won his bid to get a look at the tax advice Rinehart received in 2010 from PricewaterhouseCoopers LLP. Rinehart had sought to keep the advice private, citing legal privilege over the documents.

“Providing legal advice to the accountant for the purpose of accounting information and advice,” amounts to waiving any legal privilege, Bergin said. “You will get this material if I am right about this,” she told Withers. The judge gave McClintock an opportunity to re-argue the issue if he were able to present evidence to the contrary.

The case is John Langley Hancock v. Gina Hope Rinehart. 2011/285907, New South Wales Supreme Court (Sydney).

To contact the reporter on this story: Joe Schneider in Sydney at jschneider5@bloomberg.net

To contact the editor responsible for this story: Douglas Wong at dwong19@bloomberg.net

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