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Bleak House, eat your heart out. Hancock v Rinehart – that's real drama Bleak House, eat your heart out. Hancock v Rinehart – that's real drama
(35 minutes later)
As Justice Paul Brereton in the NSW Supreme Court has amply demonstrated, you can’t necessarily trust a trustee, particularly one with bottomless pockets who is as ferocious and tenacious as Gina Rinehart. As Justice Paul Brereton in the NSW supreme court has amply demonstrated, you can’t necessarily trust a trustee, particularly one with bottomless pockets who is as ferocious and tenacious as Gina Rinehart.
Related: Gina Rinehart's eldest daughter Bianca made trustee of $4bn trust fundRelated: Gina Rinehart's eldest daughter Bianca made trustee of $4bn trust fund
Yesterday’s judgment was a searing indictment of the first defendant’s (Gina) bullying, manipulation and control freak tendencies.Yesterday’s judgment was a searing indictment of the first defendant’s (Gina) bullying, manipulation and control freak tendencies.
As has been well established since October 2013, when the case commenced, two of Rinehart’s disaffected children – John and Bianca, the first and second plaintiffs – sought to take over management of the Hope Margaret Hancock Trust that controlled 24 percent of Hancock Prospecting, which in turn is controlled by Gina. As has been well established since October 2013, when the case commenced, two of Rinehart’s disaffected children – John and Bianca, the first and second plaintiffs – sought to take over management of the Hope Margaret Hancock Trust that controlled 24% of Hancock Prospecting, which in turn is controlled by Gina.
Such was the family rancour that Gina engaged the best brute force that money can buy in a struggle to maintain executive control of the trust, or at least not let that control be surrendered to the plaintiffs.Such was the family rancour that Gina engaged the best brute force that money can buy in a struggle to maintain executive control of the trust, or at least not let that control be surrendered to the plaintiffs.
Justice Brereton ordered that Bianca be made the trustee in place of her mother, who had actually vacated the position, “in the face of proceedings to remove her for misconduct”. Justice Brereton ordered that Bianca be made the trustee in place of her mother, who had actually vacated the position “in the face of proceedings to remove her for misconduct”.
The struggle shifted to Gina’s desire to secure the appointment of a trustee acceptable to her. As the judge put it:The struggle shifted to Gina’s desire to secure the appointment of a trustee acceptable to her. As the judge put it:
A replacement trustee will therefore need to be sufficiently robust to assert’s the trust’s right as a shareholder of Hancock Prospecting, and resist attempts by Mrs Rinehart to exert influence.A replacement trustee will therefore need to be sufficiently robust to assert’s the trust’s right as a shareholder of Hancock Prospecting, and resist attempts by Mrs Rinehart to exert influence.
Strenuous efforts were made by the defendants to have reporting of the proceedings suppressed, mediated behind closed doors, or closed down completely. Strenuous efforts were made by the defendants to have reporting of the proceedings suppressed, mediated behind closed doors or closed down completely.
The imagery surrounding the proceedings was theatrical, with overtones of Beauty and the Beast. There was Bianca Rinehart, glowing and attractive, pitted against her mother, an unhappy figure who had few in her corner, apart from retainers, expensive lawyers and Barnaby Joyce.The imagery surrounding the proceedings was theatrical, with overtones of Beauty and the Beast. There was Bianca Rinehart, glowing and attractive, pitted against her mother, an unhappy figure who had few in her corner, apart from retainers, expensive lawyers and Barnaby Joyce.
Nor can we ignore elements of David and Goliath; and just look at how David smote Goliath. Here we have some of the nation’s big gun silks and large national law shops in Gina’s pay: Noel Hutley SC, Bruce McClintock SC and Corrs Chambers Westgarth with David Studdy SC for the corporate entities.Nor can we ignore elements of David and Goliath; and just look at how David smote Goliath. Here we have some of the nation’s big gun silks and large national law shops in Gina’s pay: Noel Hutley SC, Bruce McClintock SC and Corrs Chambers Westgarth with David Studdy SC for the corporate entities.
For the plaintiffs, three junior and relatively unknown barristers: Christopher Withers, Natalie Zerial and Adam Hochroth, instructed by a boutique outfit Yeldham Price O’Brien Lusk.For the plaintiffs, three junior and relatively unknown barristers: Christopher Withers, Natalie Zerial and Adam Hochroth, instructed by a boutique outfit Yeldham Price O’Brien Lusk.
One fetching element of the case is the reminder how well people understand on which side their bread is buttered.One fetching element of the case is the reminder how well people understand on which side their bread is buttered.
This outcome really upsets the traditional order of legal firepower.This outcome really upsets the traditional order of legal firepower.
We know that Rinehart is suing Channel 9 over its mini-series on the life, times and intimacies of the Iron Queen, but if Magda Szubanski would don the Gina costume, dramatisation of the struggle over the $5bn trust would make alarming Sunday night viewing. We know that Rinehart is suing Channel Nine over its miniseries on the life, times and intimacies of the Iron Queen, but if Magda Szubanski would don the Gina costume, dramatisation of the struggle over the $5bn trust would make alarming Sunday night viewing.
Other contemporary dramatisations of families tearing themselves apart as they wrestle for assets and money also come to mind. There is Netflix’s wonderful Bloodlines, with our very own Ben Mendlesohn playing a disaffected, chaos strewing Barnaby Joyce character. Other contemporary dramatisations of families tearing themselves apart as they wrestle for assets and money also come to mind. There is Netflix’s wonderful Bloodlines, with our very own Ben Mendelsohn playing a disaffected, chaos-strewing Barnaby Joyce character.
SBS is kindly delivering The Legacy, where a family of frighteningly blond Danes are at each other throats over who get’s mother’s splendid mansion.SBS is kindly delivering The Legacy, where a family of frighteningly blond Danes are at each other throats over who get’s mother’s splendid mansion.
Estates, trusts, and legacies are the very stuff of drama. So much of the Rinehart-Hancock family business is now laid publicly bare in emails and threats that a dramatist wouldn’t need to over-egg the plot. Estates, trusts and legacies are the very stuff of drama. So much of the Rinehart-Hancock family business is now laid publicly bare in emails and threats that a dramatist wouldn’t need to over-egg the plot.
One fetching element of the case is the reminder how well people understand on which side their bread is buttered.One fetching element of the case is the reminder how well people understand on which side their bread is buttered.
Take the trust’s tax advisors, the global accounting shop PricewaterhouseCoopers. Three days before the trust was due to vest a letter (at Gina’s behest) from the chief financial officer of Hancock prospecting, Jay Newby, he told the beneficiaries that PWC had advised each of the beneficiary children would be liable for “very substantial” amounts of capital gains tax, which would lead to their bankruptcy.Take the trust’s tax advisors, the global accounting shop PricewaterhouseCoopers. Three days before the trust was due to vest a letter (at Gina’s behest) from the chief financial officer of Hancock prospecting, Jay Newby, he told the beneficiaries that PWC had advised each of the beneficiary children would be liable for “very substantial” amounts of capital gains tax, which would lead to their bankruptcy.
To save them from this plight, Rinehart thoughtfully sought to move the vesting date to 2068, when the children would be in their seventies, or older. To save them from this plight, Rinehart thoughtfully sought to move the vesting date to 2068, when the children would be in their 70s or older.
Documents obtained by the plaintiffs by discovery and subpoenas revealed that Rinehart and Newby had no such advice about capital gains tax from PWC. In fact, the advice was to the contrary; that is was unlikely any CGT would be payable on the vesting of the trust.Documents obtained by the plaintiffs by discovery and subpoenas revealed that Rinehart and Newby had no such advice about capital gains tax from PWC. In fact, the advice was to the contrary; that is was unlikely any CGT would be payable on the vesting of the trust.
Later PWC was “manipulated” by Rinehart to provide advice, on the basis of an assumption that CGT would be incurred. This was used to threaten her children that unless they agreed to an extension of the vesting date they would be insolvent.Later PWC was “manipulated” by Rinehart to provide advice, on the basis of an assumption that CGT would be incurred. This was used to threaten her children that unless they agreed to an extension of the vesting date they would be insolvent.
The misleading letter was sent at the last moment, so as to minimise the opportunity for the beneficiaries to obtain independent advice.The misleading letter was sent at the last moment, so as to minimise the opportunity for the beneficiaries to obtain independent advice.
So, here is one of the world’s great “independent” tax and accounting firms going through contortions to please a rich client. We saw something similar with USB, flipping its advice on the Baird government’s electricity privatisation plan. USB is staked to make $10-$20m in fees, so naturally, with some deft prompting, it revised it’s initial report which was called “Bad for the budget, good for the state”.So, here is one of the world’s great “independent” tax and accounting firms going through contortions to please a rich client. We saw something similar with USB, flipping its advice on the Baird government’s electricity privatisation plan. USB is staked to make $10-$20m in fees, so naturally, with some deft prompting, it revised it’s initial report which was called “Bad for the budget, good for the state”.
It’s a bit like the flat earth “think tank”, the IPA, promoting the economically hair-brained Northern Special Economic Zone as one of its policy planks (which also happens to be a pet project of generous donor Gina Rinehart).It’s a bit like the flat earth “think tank”, the IPA, promoting the economically hair-brained Northern Special Economic Zone as one of its policy planks (which also happens to be a pet project of generous donor Gina Rinehart).
But wait, there’s more. Pundits are predicting that, fortunately for the lawyers, the legal battles have scarcely begun.But wait, there’s more. Pundits are predicting that, fortunately for the lawyers, the legal battles have scarcely begun.
Rinehart has four weeks to hand over the trust documents to Bianca and six weeks to provide a sworn statement of all money and property received and disbursed by her on behalf of the trust.Rinehart has four weeks to hand over the trust documents to Bianca and six weeks to provide a sworn statement of all money and property received and disbursed by her on behalf of the trust.
Bianca can then apply to examine her mother on oath, which will be the first time the first defendant has stepped into the box. After that, the new trustee can file a claim for any improper payments made by her mother.Bianca can then apply to examine her mother on oath, which will be the first time the first defendant has stepped into the box. After that, the new trustee can file a claim for any improper payments made by her mother.
Related: Barnaby Joyce intervention in Rinehart dispute 'dangerous', says John HancockRelated: Barnaby Joyce intervention in Rinehart dispute 'dangerous', says John Hancock
Each of those steps, quite apart from Justice Brereton’s findings on Thursday, are likely to be subject to further contest and appeal. It also becomes an issue of money, for while Gina has been paying the plaintiff’s indemnity costs, at least for most of the proceedings, there are cost considerations for the remainder of the trial.Each of those steps, quite apart from Justice Brereton’s findings on Thursday, are likely to be subject to further contest and appeal. It also becomes an issue of money, for while Gina has been paying the plaintiff’s indemnity costs, at least for most of the proceedings, there are cost considerations for the remainder of the trial.
That might mean that Bianca and John will need court approval for further action. Over in the federal court there is a case that will look at the transfer of large assets to Hancock prospecting, namely the Hope Downs and Roy Hill tenements.That might mean that Bianca and John will need court approval for further action. Over in the federal court there is a case that will look at the transfer of large assets to Hancock prospecting, namely the Hope Downs and Roy Hill tenements.
And at the end of it all Gina still controls 76% of a company in which the trust has a 24% interest. Bleak House, eat your heart out.And at the end of it all Gina still controls 76% of a company in which the trust has a 24% interest. Bleak House, eat your heart out.