Supreme Court confirms HPPL’s rightful ownership of Hope Downs and East Angelas
Supreme Court confirms HPPL’s rightful ownership of Hope Downs and East Angelas
Statement attributable to Mr Jay Newby, Executive Director, HPPL:
“The primary issue in these proceedings is ownership of the Hope Downs and East Angelas tenements. 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 Wright Prospecting Pty Ltd (WPPL) in their entirety.
Justice Smith’s decision, which rejected John and Bianca’s ownership claims over the Hope Downs and East Angelas tenements, demonstrates that the assertions contained in the extracts below from earlier media reports, including wrongful assertions of fraud in relation to the ownership of Hope Downs and East Angelas, are plainly wrong. The court found that these tenements belong to HPPL exclusively. The quotes below relate to reporting during the Hope Downs trial .
The Court found that John and Bianca’s claims (page 446) “fail at the first hurdle.”
In relation to WPPL, the Court found (page 1592) “it would be unjust to allow WPPL to ‘swoop in’ and enjoy all of the fruits of the HPPL Parties’ success in the development of the East Angelas areas into a functioning mine without having contributed to any of the risks associated with the development of these areas.”
The court found that the tenements were properly HPPL’s. HPPL alone provided significant consideration. HPPL funded the tenements over decades, (nobody else did), until incoming joint venture partners and the debt financing, helped HPPL’s sole burden.
Over approximately four decades, John, Bianca, WPPL and DFD Rhodes (Rhodes) took no risk and made no meaningful contribution to developing the Hope Downs and East Angelas iron ore mines and infrastructure.
In contrast, after securing a State Agreement in December 1992, nine months after Lang Hancock’s passing, which gave HPPL the secure tenure to be able to invest, drill and advance studies, HPPL progressed the project despite significant financial and commercial hurdles. After achieving a successful bankable feasibility study for Hope Downs 1 and a successful pre-feasibility study for Hope Downs 4, a joint venture was agreed with Rio Tinto at the end of June in 2005 (right before the governments deadline) enabling the development of what are now major world-class iron ore mines.
Bringing Hope Downs to life required significant investment in exploration, evaluation and development, obtaining thousands of government approvals, securing major project financing and a joint venture partner.
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.
The remaining Rhodes royalty claim historically attributable to HPPL amounts to approximately $4.0 million per annum for Rhodes and for WPPL approximately $14 million per annum.
Any amounts payable regarding royalties and interest to WPPL or Rhodes is a shared responsibility with our partner Rio Tinto , who have a further royalty contribution in this regard, which will lessens HPPL’s contribution. . We will consult with our partner and consider our position on these matters.
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.
Over the past four years alone, HPPL generated over $54 billion in export revenue and paid over $14.5 billion in commonwealth and state taxes making HPPL Australia’s largest private taxpayer.
As noted by Justice Smith in judgment:
Quotes from Justice Smith
| Page # | Justice Smith quote (in page order) |
| 67 (para 142) | “In the WPPL proceedings, in respect of the East Angelas:
Bianca Rinehart and John Hancock have failed to make out their claim that HML then HRL held the legal and beneficial interest in the East Angelas exploration licences. Thus, their defences fail at the hurdle of the Original Acquisition Issue.” |
| 446 (para 1556) | “It is not necessary to consider any of Bianca Rinehart and John Hancock’s defences in these proceedings as they fail at the first hurdle, because it cannot be found that the Hope Downs and East Angelas exploration licences were taken up by HML then HRL on trust for HFMF.” |
| 508 (para 1800) | “WPPL holds no proprietary interest in the Hope Downs 1 to 3 exploration licences or any of the East Angelas exploration licences. It also holds no proprietary interest in any part of ML 282SA. Consequently, WPPL has no entitlement to the HPPL Parties’ profits” |
| 729 (para 2559, 2560, 2561) | “Bianca Rinehart and John Hancock’s position is that the opportunity to acquire the Hope Downs and East Angelas tenements belonged to HML, and to HML alone, because neither HPPL, nor WPPL, were interested in doing that which was necessary to obtain them; namely, build a mine. They maintain that, in these circumstances, no valuable opportunity was taken from the Partnership by HML because the Partnership was not in the business of building major infrastructure. This submission cannot be made out. From its inception in the late 1950s, the Partnership was involved in numerous iron ore discoveries. The Partnership was not simply engaged in prospecting and entering into agreements to obtain royalties.” |
| 826 (para 2897) | “For these reasons, Bianca Rinehart and John Hancock’s construction of the meaning of ‘Hope Downs’ in cl 1(b) and (e) is rejected.” |
| 841 (para 2956 and 2957) | “At the time of entry into the 1987 Partnership Agreement, the Partnership had by the Premier’s Letter informal access to TR 6446 (Hope Downs 2) for exploration and taking samples for a period of two and a half years, but no applications had been made for an exploration licence over the area comprising this reserve until HML applied for an exploration licence over this ground, together with applications for the East Angelas exploration licences on 28 November 1988. When this application for the ground the subject of TR 6446 was made, HML could not have been acting for the Partnership when making this application because WPPL had relinquished its interest in ‘Hope Downs’ in cl 1(b) of the 1987 Partnership Agreement.” |
| 920 (para 3282) | “For these reasons, HPPL or WPPL were expressly entitled to take up exploration licences over East Angelas under cl 5 of the 1987 Partnership Agreement on their own account, and the exercise of that express contractual entitlement could not constitute a breach of the fiduciary duty of the partner.” |
| 992 (para 3522) | “By the late 1980s the companies under Lang Hancock’s control were facing serious liquidity issues. At this time: 1. HML was making a loss and HFMF was not generating any substantial income. 2. The only company making significant profits was HPPL, but large distributions of money had been made from HPPL to Lang Hancock and Rose Porteous to fund their lifestyle. In addition, HPPL was being used to partly fund HML’s operations. 3. The relationship between Lang Hancock and Gina Rinehart was suffering and had reached a low point. Gina Rinehart was complaining to Lang Hancock about taking money for his own purposes and she was asking him for financial records of the companies, which he refused to provide. In addition, Gina Rinehart and Lang Hancock were talking about how to divide up the companies’ assets so they could live independently of each other.” |
| 1042 (para 3708) | “HPPL says it is evident that Lang Hancock saw a way out from the scrutiny to which he was being subjected by Gina Rinehart and with the benefit of having a company with which (so he thought) he could do as he pleased, including by providing for Rose Porteous and her increasing demands. That way out was HFMF. This submission has considerable merit.” |
| 1137 (para 4007) | “For the reasons given below in 18.3.3.1 to 18.3.3.2, WPPL’s claim that the relevant tenement holder (HML, then HRL, then HDL, then HPPL and finally HDIO) acquired and held the East Angelas exploration licences or its interest in sections 4 to 7 of ML 282SA as an asset or interest of the Partnership (either directly or through HPPL), or on trust for the Partnership, fails.” |
| 1138 (para 4011 (2)) | “Whilst prior to the entry into the 1987 Partnership Agreement the opportunity to take up and hold the East Angelas exploration licences was a commercial opportunity only of the Partnership, each of the partners separately were entitled to take up these exploration licences on their own account under cl 5 of the 1987 Partnership Agreement.” |
| 1139 (4011 (6)) | “At material times, the general ledgers of the Partnership, HML and HRL and other financial records show that work by contractors, employees and expenses and other associated costs relating to the East Angelas exploration licences were not paid for by WPPL, or attributed to WPPL in its list of mineral assets, interests and projects in its mineral costings or in the Partnership’s general ledger and accounts as contributions by WPPL.” |
| 1140 (para 4011 (7)) | “Prior to, and at the time of the acquisition of the East Angelas exploration licences by HML in 1989, WPPL showed no interest in acquiring an interest in these areas, and had formed the opinion that these areas had been taken up by HPPL through HML.” |
1145 (para 4033) | “Despite Bianca Rinehart and John Hancock’s valiant and extensive submissions, the contemporaneous evidence overwhelmingly establishes that prior to the 1987 Partnership Agreement the informal access granted by the Premier’s Letter and the Minister’s Letter to the Hope Downs and East Angelas reserves remained commercial opportunities of real value to the Partnership. They were not an opportunity that could only be used for a particular project. It was the Partnership who was granted the informal access granted by these letters. The informal access allowed the Partnership prior to the grant of any exploration licence to carry out work including fieldwork, lobbying, pursuit of development opportunities and pursuit of relationships within government. This informal access was not granted to HML.” |
| 1146 (para 4035) | “For the reasons given below in 18.6.3 to 18.6.3.6, the fact that Lang Hancock caused HML then HRL to take up the East Angelas and Hope Downs for a project that he had in mind at the time of the applications did not lawfully convert that opportunity to an opportunity of HML then HRL.” |
| 1146 (para 4036) | “For the reasons given below in 18.6.3.3, the alleged ‘income protection purpose’ is not accepted.” |
| 1147 (para 4040) | “Put another way, cl 5 did not authorise Lang Hancock as the Life Governing Director of HPPL to give that opportunity to HML without the fully informed consent of HPPL’s shareholders, which issue is considered below in 18.6.4 to 18.6.4.4 of these reasons. Without that fully informed consent, the fundamental premise to Bianca Rinehart and John Hancock’s submissions in respect of the Original Acquisition Issue fails.” |
| 1158 (para 4088) | “It was not the Partnership that bore the cost of the applications for each of the five East Angelas exploration licences, it was HML, and it was HPPL who provided the funds to HML to pay the costs of the work associated with these applications.” |
| 1159 (para 4089) | “No evidence has been adduced to show that WPPL contributed to any of the expenses associated with the East Angelas exploration licences, including after they were incorporated into the Hope Downs State Agreement. Further, WPPL never treated the East Angelas exploration licences as Partnership assets. If, as is contended on behalf of WPPL, the East Angelas exploration licences were Partnership assets, one would expect to find evidence of WPPL’s contribution to the cost of applying for the licences, exploring pursuant to the licences, and exploiting ore within it.” |
| 1160 (para 4098) | “What is material is who financed the expenditure of HML and then HRL in respect of the work carried out in relation to the East Angelas exploration licences and areas. The only available inference open on the evidence is there is no evidence that establishes any contributions by WPPL. If there were it could be expected that WPPL would have some record of that in their own accounts.” |
| 1175 (para 4141) | “WPPL has failed to prove that HML then HRL acquired and held the East Angelas tenements as a vehicle for the Partnership.” |
| 1195 (para 4217) | “In addition, all of WPPL’s personal claims for an account of profits or equitable compensation are premised on the basis that the East Angelas tenements having been the sole property, interest or opportunity of the Partnership, after the 1987 Partnership Agreement. When it is accepted that this premise has failed, then these claims necessarily fall away. Having failed at this gateway, WPPL’s plea in par 111 must necessarily fail.” |
| 1260 (para 4412) | “For all of these reasons, Bianca Rinehart and John Hancock’s contention that HPPL was to derive a benefit from HML and HRL taking up the tenements is not made out. Importantly, the evidence does not establish that HPPL received a financial benefit or other benefit from the transfer of its assets it transferred to HML and HRL, or from its opportunities Lang Hancock diverted to HML and then to HRL.” |
| 1279 (para 4471) | “For these reasons, I am not satisfied that any of the scenarios posed by Bianca Rinehart and John Hancock involving the issuing of discriminatory dividends could have been implemented for a proper purpose in accordance with HPPL’s Memorandum and Articles of Association.” |
| 1283 (para 4479) | “The opportunity to apply for the Hope Downs and East Angelas tenements was both an opportunity within HPPL’s line of business as a mining company and one that came to Lang Hancock through his role as a director of HPPL. Even if HPPL was by June 1986 just a prospecting company as Bianca Rinehart and John Hancock contend, it was in the business of applying for and obtaining mining tenements to prospect within the meaning of cl 5 of the 1987 Partnership Agreement.” |
| 1283 (para 4482) | “However, it is clear that the action of Lang Hancock in diverting HPPL’s property and opportunities in McCamey’s, the Burwill and Comada shares and the East Angelas and Hope Downs exploration licences to HML and then HRL and thus under his control of HFMF was done not to protect HPPL’s assets but to avoid scrutiny by Gina Rinehart.” |
| 1328 (para 4621) | “From 1986 to 1991 Gina Rinehart persistently made it clear to Lang Hancock that she objected to the resources of HPPL being used to fund the activities of HML, and HRL.” |
| 1328 (para 4622) | “For the reasons that follow, it cannot be found that Gina Rinehart either expressly gave her fully informed consent, acquiesced in, or ratified the breaches of fiduciary duty owed to HPPL by Lang Hancock.” |
| 1345 (para 4690) | “In addition, Lang Hancock made statements that would have misled a person in the position of Gina Rinehart in 1985, and again in 1988 into thinking that HPPL would benefit from tenements being taken up by HML by sharing proposals for development of tenements under which HPPL was said to receive substantial consideration for the tenements and/or a royalty. He also made statements that would give the (false) impression to such a person that income would be available for HPPL once projects pursued by HML were up and running, even though he then sought to have HML pay him (and not HPPL) a royalty.” |
1385 (para 4797 and 4798) | “Yet, the critical point on which Bianca Rinehart and John Hancock’s defences in these proceedings stands is the premise that HML, and thereafter HRL, acquired the Hope Downs and the East Angelas tenements beneficially. However, Bianca Rinehart and John Hancock have failed to make out this first step: they cannot prove that HML then HRL acquired these tenements beneficially. The fundamental difficulty with their submission that property was held or controlled subject to a fiduciary obligation is that it cannot be found that the Hope Downs nor the East Angelas tenements were held by HRL at any point in time on trust for the Children.” |
| 1385 (para 4799) | “This is because as considered below in 18.6.7 to 18.6.7.3 of these reasons, these tenements were at all material times held: (a) first by HML and then HRL beneficially for HPPL; and (b) HPPL in turn held the beneficial proprietary interest in the East Angelas tenements solely for HPPL and held the beneficial proprietary interest in Hope Downs solely for HPPL (subject to royalties payable by third parties on ore produced and sold from Hope Downs ‘tenements or projects’, pursuant to cl 1(b) and cl 1(e)(ii) of the 1987 Partnership Agreement which royalties are to be treated as an interest of the Partnership). Those beneficial interests were not affected by cl 5 of the 1992 Deed (which terms only addressed Lang Hancock’s two shares in Zamoever) and control of HFMF, in respect of which HFMF’s interest in HRL was subject to these interests of HPPL and the Partnership.” |
| 1386 (para 4801) | “On this basis, Bianca Rinehart and John Hancock’s defences in these proceedings fails on the ‘Original Acquisition Issue’ relating to the Hope Downs and East Angelas tenements, with the effect that their allegations of fraud concerning the Debt Reconstruction Issue become irrelevant.” |
| 1396 (para 4838) | “This is because Bianca Rinehart and John Hancock’s defences fail on the ‘gateway’ of the Original Acquisition Issue.” |
| 1416 (para 4905) | “As Bianca Rinehart and John Hancock’s claims rely upon a finding that HML and HRL at all material times held the legal and beneficial interest in these tenements, their claim that they had an equitable interest in the tenements must fail.” |
| 1417 (para 4910) | “For these reasons, HML, and then HRL, held the Hope Downs and East Angelas tenements on trust for HPPL… Those tenements were the fruits of HPPL’s opportunities, which Lang Hancock caused HML and then HRL to take up as his alter ego, in breach of his duties to HPPL.” |
| 1471 (para 5067) | “WPPL had sufficient knowledge of the material facts on the basis that it knew that the East Angelas tenements had not been acquired for or on behalf of the Partnership in February 1989. From this knowledge, together with the fact that after the rejection of their proposal WPPL did not protest that HML or HPPL had acquired the East Angelas exploration licences in breach of any duty owed to WPPL, it is to be inferred that WPPL acquiesced in HML/HPPL taking up these tenements. Put another way, WPPL had by its conduct plainly accepted that HPPL could take up these areas as agreed in the Split Memorandum, and had in fact done so through HML and as a consequence, it (WPPL) had no interest in these areas.” |
| 1472 (para 5071) | “WPPL made a conscious decision to allow HPPL to take up the East Angelas opportunity, notwithstanding that it had been a Partnership opportunity; that is, WPPL chose to yield the East Angelas areas to HML and HPPL and yield any rights that WPPL would otherwise have in the East Angelas. This is a classic instance of acquiescence in the strict form. WPPL knowingly gave up its rights and conducted itself, on a correct basis, that it therefore no longer had any rights.” |
| 1472 (para 5072) | “From these findings, an inference can properly be drawn that WPPL stood by with knowledge of all material facts whilst HML then HRL took up the legal interest in the East Angelas exploration licences. In addition, the only available inference from the contemporaneous records of the conduct of WPPL’s officers from late 1988 to the end of 1989 is that WPPL had formed the view that it was HPPL alone who had acquired a beneficial interest in the East Angelas tenements and not the Partnership. Further, by WPPL’s conduct also it can be inferred that WPPL acquiesced in the taking up of the tenements on the basis that the Partnership or WPPL itself would acquire no legal nor beneficial interest.” |
| 1476 (para 5090) | “In December 1992, WPPL knew, or ought to have known from publicly available information, that the Hope Downs State Agreement (which was passed publicly by the Legislative Assembly and Legislative Council of Western Australia and subject to multiple public readings) conferred exclusive rights concerning the East Angelas exploration licences on HPPL’s subsidiary, HDL. The State Agreement required HDL to comply with the expenditure provisions under s 62 of the 1978 Act. It also gave HDL until 30 June 2003 to negotiate as to the basis on which HDL might be given rights to mine and recover iron ore from Area C, which included East Angelas. Neither WPPL nor any of its subsidiaries were parties to the Hope Downs State Agreement. Nor were WPPL, its subsidiaries, or the Partnership referred to anywhere in the publicly available Hope Downs State Agreement. WPPL never once raised a concern about the fact that it was not a party to the Hope Downs State Agreement which is consistent with its position that it had no interest in East Angelas areas.” |
| 1567 (para 5381 and 5382) | “For these reasons, I do not find the use to which WPPL seeks to draw from the valuations formulated by Robert McDonald to be of any great assistance in assessing whether the development of the East Angelas tenements was a risky venture. It is apparent that from 1989 there were a number of variables which may have resulted in the Hope 4 tenements not being developed into a functioning and profitable mine by 2013. Further, for these reasons, it is clear from the evidence given by the experts, including Robert McDonald (who finally conceded), that the development of the East Angelas exploration licence deposits, like any mining development was a risky venture.” |
| 1572 (para 5397) | “The first flaw in WPPL’s argument it shared in the risk of the development of Hope 4 into a functioning profitable mine is that it has not been established that anything of WPPL’s was invested in Hope 4.” |
| 1573 (para 5399) | “Third, there is no evidence that WPPL was willing to share in the risk. To the contrary, after the 1987 Partnership Agreement and until August 2012, it showed no interest in the East Angelas deposits.” |
| 1574 (para 5404, 5405, 5406) | “From all of this evidence, the inevitable inference arises that the HPPL Parties put its own money into repaying the Hope 4 debt from sources other than profit or income generated from the Hope 4 mine. The effect of the early debt repayments, three of which were scheduled and two of which were voluntary was before Hope 4 started producing revenue in 2013, the HPPL Parties had effectively invested some $360 million of equity into the Hope 4 project. If the Hope 4 mine had become unviable in 2012 and never went into production, then the equity that the HPPL Parties contributed would have been lost. So that was real, substantial money that was put at risk. For these reasons, the contentions that WPPL contributed to the risk and that the financing arrangements were without risk cannot be accepted.” |
| 1578 (para 5425) | “Irrespective of whether there are some errors in the expenditure records of the HPPL Parties, what WPPL cannot show is that it contributed to any funds expended on the development of the East Angelas exploration licences into a functioning mine.” |
| 1579 (para 5427, 5428, 5429) | “The development of East Angelas areas from 1989 to a functioning profitable mine in 2013 was a venture not without significant risk. There was a wide array of risks that could have prevented or stalled its exploration development. Although the character of those risks changed over time, at all times there were existential threats such as commodity prices and exchange rates which would mean that at any time prior to the completion of the mine there was no guarantee that this venture would one day turn out to be profitable. Where a significant outlay in a venture is involved such as in the case of the development of East Angelas deposits, and where there was a risk of the venture being ruined if things did not go well the requirement to bring a proprietary claim promptly applies. WPPL was not entitled to sit back and ‘wait and see’ after great expense had been incurred by the HPPL Parties before bringing a claim. If it wanted to make a proprietary claim in respect of the East Angelas areas of ML 282SA, it was incumbent upon WPPL to come forward early and to take the burden of the high level of risk that was required in order to develop these areas into the Hope 4 mine, which burden it had left entirely to the HPPL Parties.” |
| 1587 (para 5468) | “For these reasons, it is difficult to understand how a declaration of trust in favour of WPPL over HDIO’s interest in the East Angelas areas of ML 282SA only, could exist or operate at all, given its inconsistency with the terms of the Hope Downs Joint Venture Agreement. Plainly, a host of complexities could potentially arise and affect the efficient management of the joint venture.” |
| 1588 (para 5472) | “Contrary to WPPL’s contention, the passage of time has not reduced any prejudice to the HPPL Parties. All that has occurred is that WPPL stood by for many years without showing any appetite to share in the risks of development of the East Angelas areas comprised in the exploration licences, and waited to bring a claim which by then the market for iron ore was booming and prices for product were high, and after a decision had been made to mine the deposits.” |
| 1590 (para 5481 and 5482) | “Further, and in any event, the HPPL Parties did not only risk the loss of expenditure on the exploration and development of the East Angelas into a functioning mine, but they also risked the loss of their interest in the highly profitable Hope 1 mine assets. The character of the East Angelas areas transformed radically from an infant, speculative exploration project in 1989 to a mine that was poised to embark upon substantial and lucrative mining activities in 2012, when WPPL first notified the HPPL Parties of its proprietary claim.” |
| 1590 and 1591 (para 5484, 5485, 5486) | “During the period of WPPL’s delay, the HPPL Parties devoted funds, time, care, attention and skill to developing Hope 4. They transformed the asset. WPPL made no contribution in funds nor effort after 1989 to the development, and shared no risks undertaken by the HPPL Parties, nor did it risk its own funds and assets. Granting relief to WPPL in these circumstances would be manifestly unfair because it would confer an enormous advantage on WPPL that was exclusively a product of the stunning economic transformation of East Angelas during WPPL’s 23 or seven year delay. The authorities repeatedly emphasise that it would be inequitable to grant relief where a plaintiff has stood by – deliberately or carelessly – and only intervened once the success of the venture was assured. That is precisely the case here. Equity should not assist WPPL when it was unwilling to share in possible loss as well as profit and was unwilling to share any of the burden that the HPPL Parties carried.” |
| 1591 (para 5490) | “As the HPPL Parties submit, the death of Michael Wright is particularly critical. The internal documents of WPPL from 1989 and 2005 show that he was intimately involved with and responsible for WPPL’s engagement with HPPL, including discussions about the ownership of mining tenements, and of particular relevance to this defence, the ownership of the East Angelas exploration licences. He was a central figure at WPPL for almost the entire 23 or seven year period of delay. By the time the proprietary claims to the East Angelas were made in August 2012, the HPPL Parties had lost the opportunity to question him about any of those matters, including the 1989 and 2005 documents containing advice to WPPL about the East Angelas tenements, in respect of which Michael Wright clearly received. Further, during his lifetime he had made statements orally or in writing to the effect that WPPL had no interest in the East Angelas.” |
| 1592 (para 5495 and 5496) | “For these reasons, the HPPL Parties and Hamersley would suffer substantial prejudice if WPPL were to now be granted proprietary relief in respect of the East Angelas areas. In these circumstances, it would be unjust to allow WPPL to ‘swoop in’ and enjoy all of the fruits of the HPPL Parties’ success in the development of the East Angelas areas into a functioning mine without having contributed to any of the risks associated with the development of these areas over the years.” |
John and Bianca’s abusive claims of serious wrongdoing during the trial against Mrs Rinehart were not accepted by the judge
Set out below are examples of the abusive, and sensationalist, accusations of serious wrongdoings in relation to HPPL’s tenements which were repeatedly reported on by the media. Based on the findings of Justice Smith it’s clear that those serious allegations of wrongdoing should not have been made.
| Article | Text of article |
Billions at stake as Rinehart battles over handshake deal July 24, 2023 | Two of them, John Hancock and Bianca Rinehart, will run their own legal argument suggesting they are the rightful owners of Hancock Prospecting’s 50 per cent stake in Hope Downs mines and, in doing so, make allegations of fraud that are disputed by their mother and Hancock Prospecting. ……… In legal skirmishing in the Supreme Court, John and Bianca have sided with Wright Prospecting in opposing a trial delay pending the outcome of the arbitration. They have also accused Rinehart in court of a “fraudulent and dishonest design” in the transfer of Hope Downs assets, an allegation rejected by their mother.” |
Rinehart’s son couldn’t afford to service his car, court told August 17, 2023 | “While Mr Withers contests that Mrs Rinehart defrauded her children by moving the Hope Downs tenements out of one company and into Hancock Prospecting’s control, Hancock lawyers say she was working to right her father’s wrongs.” |
Rinehart family dispute consumes high-stakes WA mining trial August 18, 2023 | “The children claim the Hope Downs operation was built on the foundations of a fraudulent scheme and the mining tenements that Hancock and Wright are fighting over in fact should belong entirely to them.” |
Wrongs righted
Justice Smith held that Mrs Rinehart “consistently throughout the years put a view to Lang Hancock that the mining tenements were HPPL’s and… the mining tenements were HPPL’s property”. Lang ultimately accepted that asset transfers from HPPL were improper. After Lang passed in March 1992, Mrs Rinehart took steps to give effect to Lang’s wishes by “transfer[ring] tenements held by HRL to a wholly-owned subsidiary of HPPL… to develop the Hope Downs and East Angelas tenements”.
| Page # | Justice Smith quote (in page order) |
| 414 (Para 1431 (c)) | “Lang Hancock wrongly diverted HPPL’s commercial opportunity to take up the East Angelas pursuant to cl 5 of the 1987 Partnership Agreement, and in doing so he breached his fiduciary duties to HPPL” |
| 438 (Para 1520) | “It has also been found that HPPL did not exercise its right to take up the East Angelas areas, instead Lang Hancock in breach of trust to HPPL caused HML to take up the East Angelas exploration licences which opportunity to do so was HPPL’s pursuant to cl 5 of the 1987 Partnership Agreement. This conduct of Lang Hancock resulted in HML then HRL holding those licences on trust for HPPL.” |
| 506 (Para 1794 (3)) | “When HML took up the exploration licences in 1988 over the Hope Downs and East Angelas areas, it did so as a result of Lang Hancock’s breach of fiduciary duty to HPPL, the effect of which was that HML held its interest in the exploration licences on trust for HPPL alone.” |
| 1114 (para 3937) | “HML had nothing to do with WPPL, nothing to do with the Partnership, and was used entirely as a device for Lang Hancock to pursue the development of tenements divorced from Gina Rinehart’s scrutiny and divorced from his responsibilities to HPPL.” |
| 1146 (para 4035) | “For the reasons given below in 18.6.3 to 18.6.3.6, the fact that Lang Hancock caused HML then HRL to take up the East Angelas and Hope Downs for a project that he had in mind at the time of the applications did not lawfully convert that opportunity to an opportunity of HML then HRL. To do so was a breach of fiduciary duty Lang Hancock owed to HPPL.” |
| 1236 (para 4329 | “HPPL and HFMF and its subsidiaries HML and HRL were effectively run and controlled as a group of companies by Lang Hancock. Lang Hancock treated each of these companies as his own, and to do as he pleased. Notably, he made such a statement to this effect (albeit about HPPL only) to Gina Rinehart in August 1984.” |
| 1279 (para 4472) | “Lang Hancock never sought to act in the interests of HPPL in causing HML (and later HRL) to acquire the Hope Downs and East Angelas tenements, or for HML to acquire McCamey’s Monster TR 4326. Rather, he acted in his own self-interest and in breach of his fiduciary duties to HPPL.” |
| 1281 (para 4478) | “In summary, Lang Hancock’s conduct comprising breaches of fiduciary duty to HPPL as part of a dishonest and fraudulent design (which conduct was undertaken without the fully informed consent of all of the shareholders of HPPL, namely Gina Rinehart) was as follows: (a) (b) in or about May and June 1986, he diverted HPPL’s property in McCamey’s, the Burwill and Comada shares, together with the ship unloaders contracts to HML at about the same time that he caused HPPL to divest its entire interest in HML by the sale of HPPL’s shares in HML to HFMF. These transactions were of no, or no real, financial benefit to HPPL; Lang Hancock subsequently negotiated in 1989 with Pennant a royalty to be paid personally to him and not HPPL (which agreement lapsed), and again in late 1991 with BHP Minerals; from ore produced from McCamey’s, which arrangement with BHP Minerals he did not undo until shortly before his death in 1992 when he executed the 1992 Deed; (c) (d) (e) (f) (g) (h) Lang Hancock caused HML to make applications for exploration licences on 28 November 1986 over the areas comprising TR 5072 (Hope Downs 1) and TR 4886 (Hope Downs 3), when the opportunity to acquire the Hope Downs exploration licences had been a Partnership interest at the time of the applications but pursuant to cl 1(b) and 1(e) of the 1987 Partnership Agreement became solely a HPPL interest in June 1987, except as to royalties paid by third parties. Consequently, from June 1987 until EL 47/308 (Hope Downs 1) and EL 47/309 (Hope Downs 3) were granted to HML on 25 April 1988, the opportunity to obtain these tenements were an opportunity of HPPL only and not HML; Lang Hancock caused HML to make applications for the East Angelas (and Hope Downs 2) exploration licences in November 1988 when the opportunity to take up these tenements was an opportunity of HPPL only pursuant to cl 5 of the 1987 Partnership Agreement, and not HML; HPPL received no financial benefit from HML taking up the East Angelas and Hope Downs exploration licences; the agreement with Pennant led to the agreement made on 22 December 1989 whereby HFMF and HML agreed to sell the shares in HML to Pennant, which agreement provided for Lang Hancock to be paid a royalty from ore produced from McCamey’s. As a result, Lang Hancock put in place arrangements to transfer the Hope Downs and East Angelas tenements to HRL in February 1990 and for the sale of HPPL’s shares in HRL for $2 in April 1990; Lang Hancock caused HPPL to fund the mining activities of HML, and later HRL by intercompany loans that were not financially beneficial to HPPL; and HRL’s subsequent acquisition of Hope Downs 1C (EL 47/597) (which included part of the Baby Hope ore deposit) was but a continuation of the circumstances created by Lang Hancock’s breach. Hope Downs 1C was applied for by HRL on 22 April 1992, just after Lang Hancock’s death, and was ultimately granted on 6 October 1992. Part of Baby Hope falls outside the boundaries of former TR 5072 and into Hope Downs 1C (EL 47/597). Baby Hope is part of that same contiguous ore body which extends along the south-western ‘finger’ portion of TR 5072. The reason why HRL, rather than HPPL, applied for that tenement less than one month after Lang Hancock’s death is as HPPL contends, obvious. HRL held the balance of the Hope Downs tenements at that time and steps had not yet been taken to undo Lang Hancock’s earlier wrongdoing and restore to HPPL its assets and opportunities that were taken away.” |
| 1284 (para 4485) | “The diversion of HML into HFMF and McCamey’s Monster into HML placed Lang Hancock into a position of conflict.” |
| 1286 (para 4497) | “It is patently clear Lang Hancock used his fiduciary position as Life Governing Director of HPPL to then acquire and divert HPPL’s opportunities to acquire the East Angelas and Hope Downs exploration licences, and to divert other assets to support the exploration of these tenements.” |
| 1287 (para 4499) | “Plainly the diversions constituted serious breaches of fiduciary duty. These circumstances plainly answer the description of a dishonest and fraudulent design. This conduct constituted a transgression of ordinary standards of honest behaviour of a director who at the material times held the power of a Life Governing Director who wielded absolute control over the affairs of HPPL, and at the same time had absolute control over HML and HRL and their parent company HFMF as their controlling director or shadow director.” |
| 1290 (para 4509) | “The evidence clearly shows HML was knowingly involved as a knowing participant in Lang Hancock’s breaches of duty of diverting the Hope Downs and East Angelas tenements to HML. This conduct constituted a dishonest and fraudulent design by Lang Hancock, in respect of which HML had actual knowledge as HML’s controller was Lang Hancock and Kevin Dalby (who in turn acted under the direction of Lang Hancock).” |
| 1291 (para 4515) | “Turning to HML and HRL, as HPPL contends each of HML and HRL were but shells of companies until Lang Hancock diverted HPPL’s assets and opportunities into those companies in breach of his fiduciary duties to HPPL. They were devices whose very purpose came to facilitate Lang Hancock’s breaches by receiving the tenements and other assets he diverted from HPPL into them.” |
| 1293 (para 4518) | “Lang Hancock treated HML and HRL, as indeed he treated HPPL and HFMF, as if they were mere extensions of himself; his corporate vehicles with which he could do what he liked and extract whatever financial benefit he liked without regard to the best interests of HPPL.” |
| 1326 (para 4614 | “As already found in these reasons, Lang Hancock’s conduct to divert the opportunities to apply for the Hope Downs and East Angelas tenements to HML were clear and serious transgressions of ordinary standards of honest behaviour of a director, so as to amount to a dishonest and fraudulent design.” |
| 1328 (para 4622) | “For the reasons that follow, it cannot be found that Gina Rinehart either expressly gave her fully informed consent, acquiesced in, or ratified the breaches of fiduciary duty owed to HPPL by Lang Hancock.” |
| 1335 (para 4652) | “Importantly, there is no evidence that Lang Hancock informed Gina Rinehart that he intended to cause HML to cease being a subsidiary of HPPL or that the East Angelas or Hope Downs exploration licences were to be taken up by HML prior to taking any action to put these steps in place.” |
| 1385 (para 4800) | “Consequently, the Hope Downs and East Angelas tenements could not become property of the HFMF Trust because the tenements were, at all times, from the time of acquisition by HML then HRL, clothed by the prior equitable rights and interests of HPPL by virtue of Lang Hancock’s breaches of fiduciary duty, which breaches were transmitted to HML and HRL by the application of the alter ego principle and the principles applying to the second limb of Barnes v Addy.” |
| 1407 (para 4875) | “In these proceedings, the factual circumstances establish that HML took up the East Angelas and Hope Downs tenements as a knowing assistant and alter ego of Lang Hancock in a ‘dishonest and fraudulent design’ which conduct was a breach of his fiduciary duty to HPPL, then HRL also as Lang Hancock’s alter ego received and knowingly assisted in the transfer of the tenements from HML.” |
| 1417 (para 4910) | “For these reasons, HML, and then HRL, held the Hope Downs and East Angelas tenements on trust for HPPL (except as to royalties payable from third parties on ore produced from Hope Downs which royalties were to be treated as an interest of the Partnership). Those tenements were the fruits of HPPL’s opportunities, which Lang Hancock caused HML and then HRL to take up as his alter ego, in breach of his duties to HPPL.” |
