How Gina Rinehart lost hundreds of millions of dollars in court

This is the Garnian.

Hi, it's Nort Haider here.

Yesterday the Supreme Court of Western Australia handed down a judgment

more than 10 years in the making.

It'll force Gina Reinhart's Hancock prospecting to pay hundreds

of millions of dollars to a rival mining family.

And so we're bringing you a special update episode from our 2025 series,

Gina, which explored the life of Australia's richest person.

Okay, here's host Sarah Martin.

Um, yeah.

Okay.

So, here we are.

We both flown a long way to be here.

Yep.

Why, why are we coming?

We're here for the long-awaited judgment in the right prospecting,

versus Hancock prospecting case.

Outside the Western Australian Supreme Court, Reinhart's falling on the pavers

that surround the building.

As the media gathers and reporters present to camera,

everyone like us is here waiting to hear the verdict in one of Australia's

longest running corporate legal cases.

It's one that is endlessly complex, involving the country's richest woman,

Gina Reinhart and her company Hancock prospecting,

and the family of her late father's mining partner, Peter Wright,

and their company, Wright prospecting, as well as others,

including mining giant Rio Tinto and Gina's own children.

And it concerns the royalty streams from some of Australia's biggest iron or mines,

including Hope Downs, which Hancock prospecting operates as a joint venture

with Rio Tinto.

What's at stake is billions and billions of dollars of iron or royalties

and my ownership.

And obviously the Wright family want a stake in those assets,

which they say were never relinquished by their late father, Peter Wright,

who was Lang Hancock's business partner.

But also, what's at stake is no ownership rights to other assets

and a share of Hancock prospecting itself.

So there's a lot at stake for Gina Reinhart.

Yeah, it could be a very consequential though.

Oh yeah, I think, I mean, either way, it's consequential for everyone

because either she gets a massive victory

or she has a fairly, what I would argue,

would be a fairly humiliating loss if, depending on what the judge has to say.

I don't think we're expecting her.

We know that John Hancock is in London.

I think we can say we've great certainty that for John Hancock,

this is probably the biggest day of his adult life.

From Guardian Australia, I'm Sarah Martin.

And this is Gina, a podcast series about Australia's richest person.

Episode eight, a day in court.

Hey, can I just ask, obviously, I'm here with our producer Joe Coney.

And there is, you know, it's got all that on the ground here

that the judge has been 1600 patients long.

Do you have any indication as to, oh my god, I go, right.

It's going to be a lot to get through today between the two of us.

It's so nice of Gina to arrive.

I never know.

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Okay, we've just come out of the courtroom.

Justice Jennifer Smith has handed down her summary of the judgment.

The atmosphere in the courtroom was very tense.

It was a very small public gallery.

There weren't many people there.

Probably about two dozen lawyers,

small number of journalists,

a few hand-cott prospecting executives in the front row of the public gallery.

But otherwise,

you wouldn't get a sense of how consequential the verdict was

by being in the courtroom.

It was received with sort of absolute silence.

There was no reaction.

There were no gasps.

So now we are heading outside.

There's a media scrum waiting to see whether any of the lawyers

are going to come out and address the media.

There are some reporters even joking about what North has just happened.

Obviously, there are some reporters even joking about what North has just happened.

Obviously, there's a lot to digest with a 1655 page judgment.

And what we've learnt today is that

hand-cott prospecting has lost a major part of that case.

But they've also claimed to win in another part

in terms of ownership of certain mining assets.

So basically, hand-cott prospecting is on the hook

for likely hundreds of millions of dollars to write prospecting.

That's all.

Outside court, there are no speeches from hand-cott prospecting lawyers

nor from write prospecting.

The only person who stops to talk is Matt Keede,

chief executive of DFD Roads,

a mining company formed by the prospector Don Roads,

who dealt with hand-cock and write.

Just a smith in her ruling found the family business had partly won its claim

against hand-cott prospecting,

awarding it past and future royalties.

And in the process, validating that Roads was a crucial part

of helping the two prospectors unlock iron or tenements in the pilgrim.

Well, we are very, very pleased

that the judgment has recognised the contribution of Don Roads

to the iron or industry.

What does it mean for you?

It means it went. Can you just contextually just give us

some kind of idea of what this is worth?

Well, no, not at the moment.

What would you say about hand-cott prospecting in Gina Reinhardt

have handled this case from the get-go?

That are formidable opponent.

Thank you very much, everyone.

I'll elaborate on that.

Hello.

Hi. Sorry, that's my voice.

How are you feeling? Have you recovered?

I feel a bit wrecked.

I feel my brain was a bit frizzed after yesterday.

It was a very long day.

It was a long day.

We're talking it's the day after the judgment now.

We're back in our respective cities.

You've had some time to sit with the judgment.

You probably haven't had enough time to read the whole thing.

No, I have not.

I am a fast reader, but not that fast.

Why don't we start with what you think is the most significant part of this verdict?

Well, obviously, I think the most significant part of this verdict

is that hand-cott prospecting and Gina Reinhardt

lost in a major part of the case, which was right prospecting's claim,

that they were entitled to a share of the royalties coming from Hope Downs.

That decision is consequential both financially, but I also think psychologically,

because obviously hand-cott prospecting has been fighting this since 2010,

and they have spent likely tens of millions of dollars trying to prove that

claim wrong.

So it's a fairly humiliating loss, I would argue,

and it's going to cost both hand-cott prospecting and re-otinto

a combined hundreds of millions of dollars.

And obviously that is subject to yet another legal fight.

But to me, that's clearly the most consequential thing.

And the headline finding, I guess, of this judgment.

So basically, the judge found that right prospecting was entitled

to a share of the royalties that stem from the Hope Downs mine complex,

which is obviously the project that is run as a joint venture project

between hand-cott prospecting and re-otinto.

They had argued that they had a 50% proprietary interest

in the royalty stream, and the judge upheld that claim.

And how much does that translate to?

Well, that is not yet determined.

Right prospecting, there are estimates around the place of between $809 million.

The claim is for both historic and future royalties.

So the final figure is unknown at this point.

A hand-cott prospecting claim that historically it amounts to about $14 million a year.

But that's still a significant sum if you're looking at going back to 2007.

However, hand-cott prospecting hasn't been willing to elaborate on how they've calculated that.

This is going to be a case of, you know, actuaries at 12 paces arguing over maths,

which is surprising in some respects because clearly in a re-otinto and hand-cott prospecting

know the value of the royalties paid since they began operating them on.

But again, it's very unlikely that hand-cott prospecting and prospecting

are going to agree because they have really agreed.

And so that's subject to a further hearing.

So obviously interestingly enough, Justice Smith, you know,

she was quite transparent in saying that this was almost a half-win, half-loss for both parties.

Hand-cott prospecting seized on that half-win and said that the primary issue in the proceedings

was the ownership of those assets at Hope Downs.

HPPL welcomes the WA Supreme Court decision, which decisively confirms

HPPL's rightful ownership of these tenements, firmly rejecting

the baseless ownership claims of John Bianca and right-prospecting property

limited in their entirety.

So basically hand-cott prospecting put out a statement very shortly after the judgement

saying that this was a great result for them.

This decisively confirmed their ownership of those assets.

And we've had part of that statement read out by a voice actor.

The Court found that these tenements belong to HPPL exclusively.

But they didn't focus on the loss part of the judgement,

which was the significant royalty payments they'll have to make to right-prospecting.

On the far less significant issue of royalties,

HPPL welcomes the Court's rejection of WPPL's claim to a volume royalty.

HPPL also welcomes the Court's rejection of the majority of Rhodes royalty claims.

They did indicate that they were considering their position,

which I guess can be interpreted to mean that there is an appeal is possible,

and they will discuss their position with Rio Tinto before they decide what to do next.

But they did sort of say that there was the far less significant issue of royalties for them.

And up, you know, maybe when both parts are quantified,

that may well be the case.

Obviously, hand-cott prospecting didn't want to hand over any ownership stake,

which also would relate to future earnings.

So, yeah, look, I can see why they seized on that.

But I think, you know, generally speaking,

while a win may be a win, the loss is also a loss,

and they certainly downplayed the fact that they're now on the hook

for hundreds of millions of dollars to right-prospecting,

which was really the sort of central thrust of their claim from the to get go.

Hope Downs today generates hundreds of millions of dollars

in taxes and royalties to the state government each year,

supporting hospitals, nurses, police, emergency services, roads and more

while sustaining high-paying jobs for West Australians

and creating opportunities for many businesses.

And then on the other side, right-prospecting,

which is obviously the company which belonged to Peter Wright,

who was Lang Hancock's former business partner,

they put out a statement also welcoming the decision of Justice Smith,

saying that this had indicated their claim for their share in royalties,

that this is what the case had been about from the get-go,

and they were very happy with the result.

Now, they also said that they would review the judgment in detail

before considering their next steps, which may also indicate an appeal

to their side for the lost part of the judgment.

Interesting that both parties in many respects have the same approach.

It's celebrate their wins, say a little about the lost part

and consider their position for appeal.

So the fight goes on.

And so what about John Hancock and his siblings?

Obviously, we've covered their case against their mother earlier in this podcast series

in episode four.

What did the judge make about the children's claims?

So obviously, the children were enjoined to this case

because of their separate claim against their mother.

Now, obviously, that is a multi-faceted claim.

I guess we can sort of broadly break it down into two parts.

One is the assets that were in the trust that they believed they were entitled to,

following Lang Hancock's death.

And the other part is their shareholding of Hancock prospecting

and how much of Hancock prospecting they believe they are entitled to,

again, based on the wishes of the late Lang Hancock.

Now, the judge basically said it was not relevant to the Hope Downs judgment

for her to consider a range of those issues.

And she effectively handled that back to the arbitration,

which is a separate federal court process that is confidential

and which the family are subject to.

The most interesting thing about the Hancock prospecting statement

is that even though the main part of this court case

was right prospecting's claim,

a lot of their statement focused on the children.

Justice Smith's decision, which rejected John

and Bianca's ownership claims over the Hope Downs

and East Angela's tenements,

demonstrates that the assertions contained in the extracts

from earlier media reports,

including wrongful assertions of fraud

in relation to the ownership of Hope Downs and East Angeles,

are plainly wrong.

Now, the court found that certain of John Bianca's claims

failed at the first hurdle.

They basically said that the court had found

that the children had absolutely no right to hope Downs

and they were very critical of the children.

And in fact, the statement talked about

abusive and sensationalist accusations of wrongdoing

and they had accused Gina Reinhardt of egregious fraud

and those claims were not upheld by Justice Smith.

John and Bianca's abusive claims of serious wrongdoing

during the trial against Mrs Reinhardt

were not accepted by the judge.

Based on the findings of Justice Smith,

it's clear that those serious allegations of wrongdoing

should not have been made.

So, shortly after the judgment,

John Hancock put out a statement reacting

to the findings of Justice Smith.

Now, obviously, given Justice Smith ruled on the Hope Downs

royalty issue but didn't consider other parts of the children's claim,

John basically said that they weren't actually expecting

to receive any award.

They had been enjoying to this litigation

and they hadn't claimed anything in regards to this

so they weren't necessarily disappointed.

And in fact, they said they were heartened by the remarks

of Justice Smith who had made some commentary

about their entitlement to Hancock prospecting shares,

which, I know this is very complicated,

but that is subject to a separate federal court arbitration

which is binding on the family and which was effectively

waiting the outcome of this case before proceeding

to determine the entitlement of the children

to Hancock prospecting shares.

What we did receive from her honour

were findings and remarks which are in line

with my initial approach to my mother, Gina,

over two decades ago,

regarding our family company corporate structure

and with public comments I made in 2014

and consistent with our case.

As a young man with little access to documentation

and no wealth to provide a small fraction

of the extensive legal team I've constantly been up against,

it was and has since joined by my sister Bianca

an incredibly difficult fight for fairness.

The events, various agreements and background

to this litigation are complex

and the judgment over 1600 pages

where many of the participants have died

or enabled or declined to provide evidence.

We also argued that Gina's conduct after Lang's death,

including the debt reconstruction of the mid-1990s,

is relevant to assessing their dealings and state of mind.

Her honour has found the debt reconstruction matters

are to be determined in the arbitration.

So John argues that the fact that those issues

weren't upheld by Justice Smith are not as significant

as her remarks on the share holding agreement.

And so again, we have a situation where both family parties

are sort of claiming victory

and obviously they're not both necessarily right

but in many ways there's something,

there's some indication for both sides

in what Justice Smith has handed down.

And there was something in John's statement

as well that hinted towards maybe a desire

to stop the family war that's been going

for decades at this point.

Yeah, I mean, it's interesting isn't it?

And sort of it's hard not to be a little bit cynical

like if they had one, you know,

they'd want a little creative part of the royalty stream.

Would he be calling for reconciliation?

I don't know, that's obviously open to debate.

But in this statement put out after the judgment,

John Hancock basically offered an olive branch

and he said that.

Rather than continuing disagreements

about the validity of agreements from the 1980s,

perceptions of events from decades ago

or the pain this conflict has caused

all parties over the years,

I would much prefer to focus on the positive

and find a fair and reasonable way forward

for the whole family.

My primary focus for the next 21 days

is an attempt at that reunification

and a return to the close family

we had at various times in the last 50 years of my life.

Which to me was the most interesting thing

that happened on Wednesday to be honest.

Like, you know, yes, you've got these massive corporate entities

fighting over hundreds of millions of dollars of royalties.

But it obviously the family dynamic is fascinating.

And this case has ends so much dirty laundry

about the Hancock dynasty

and the relationship between Reinhardt and her children.

It's been going on for more than 15 years

and in the case of the children,

obviously they've been fighting for two decades.

So it's interesting that John has taken this moment

to, in a way, sort of rise above

and say this is the time to reconcile

but maybe also, if you're viewing it cynically,

maybe it's also timing-wise,

it comes just before the arbitration.

It's going to be much better for the children financially

if this can be resolved amicably.

I mean, arbitration is binding.

But, you know, if the family wanted to agree amongst themselves

as to how they divvy up the billions of dollars

in dividends that sit and reserve

with Hancock prospecting,

then you might not need the arbitration.

So I guess it's, you know,

it's very much a watch this space.

But I thought it was really interesting

from John to end his statement,

striking that tone of like,

well, what is it?

Like it was a hopeful tone, I guess.

You know, he says he hopes they can put

these events behind us and move on

and all live as a United Happy Family.

I mean, history would show that that's very unlikely.

But I thought it was an interesting move from John Hancock.

I hope we can finally put these events

from decades ago behind us.

And as a United Family,

celebrate and continue the contribution

we have made to Australia.

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We also know that Lang had been quoted

as wanting to avoid a quote lawyer's picnic

when it came to him passing on his wealth

to his family.

And that is clearly what has happened.

I mean, there were swarms of lawyers at the court yesterday.

And it really struck me of, you know,

what an incredible sort of industry this has spawned,

this litigation has spawned.

And there's been reports in the fin that the legal costs

for the right family up to $100 million.

That's just absolutely staggering.

And you can rest assured if that's what right.

Prospecting has spent then Hancock prospecting

in Gina Reinhardt would have spent at least that.

So I mean, these are astronomical figures.

You know, they're fighting over this case.

They're using the public resources of the court to,

you know, it's like a 51 day trial.

The court can be doing other stuff that's in the public interest.

And ultimately, these two family dynasties

are fighting over the wealth that has come

from Australia's resources, which, you know, arguably,

they've both got enough.

I mean, they're all billionaires.

And they're just, you know, you've got your billions of dollars.

Do you really need to be fighting over hundreds of millions of dollars more?

There's a future cost hearing where they will argue about this.

The judge suggested that given they both won a bit,

lost a bit in the judgment, maybe they should just bear their own costs.

You know, clearly they're going to fight about costs as well.

You know, unless they can agree.

But as we've said, history shows these parties do not agree easily.

Throughout the course of this series,

one of the things we've been trying to do is

look at the history of mining in the Pilbo and Western Australia

and the story that the Reinharts and the Hancock's tell

about their family's part in that history

and opening up this industry.

Does today's judgment change that story at all for you?

Yeah, I think it does.

I think it does because ultimately the court judgment

recognizes the role that Peter Wright played in open up the Pilbra

and it also recognizes the role of Don Rhodes,

who was a businessman who worked with Wright and Hancock at the time

and who had an agreement with them that financially rewarded him for that role.

So it might not be a massive realignment in the wealth of the Pilbra,

but it's important because I think we have to keep in mind

that Gina Reinhart and Hancock prospecting have spent the best part of two decades

fighting the families of these two other prospectors in the Pilbra,

fighting their claim for effectively recognition.

I mean, it's recognition financially, not just in a sort of narrative sense,

but it's recognition financially of their role in developing the Pilbra

and discovering these tenements in particular.

So the fact that she spent a lot of time fighting those claims

suggests that she hasn't really wanted to acknowledge their role

and in fact, she has disputed their claims.

So I think the fact that the Wright family and the Rhodes family were successful

and sure not wholly successful, but partly successful in being recognized

by the court is a blow not just to Hancock prospecting and Gina Reinhart financially,

but it's a blow to their mythology as well.

The series producer for Gina is Joe Coney,

a special thanks in this episode to Hannah Parks,

Karishmoly Threeer, Miles Herbert, Nick Miller and Steven Byrne.

I'm Sarah Martin.

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