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Not one of the billions of dollars in iron ore royalties from Gina Rinehart's Hope Downs mines has been received on behalf of a partnership her father Lang Hancock had with Peter Wright, the Supreme Court has heard.
Key points:
- Lawyers for Hancock Prospecting continued their opening address on Tuesday
- They say a 1987 agreement saw Wright Prospecting relinquish its rights to Hope Downs
- Noel Hutley SC said the Wright claim should be "disposed of"
The partnership is central to a high stakes civil court case with multiple claims over the extremely valuable mining tenements, which Mrs Rinehart's Hancock Prospecting says has a total production capacity of approximately 47 million tonnes per year.
Top Sydney barrister Noel Hutley SC, for Hancock Prospecting, who has previously represented billionaire James Packer and News Ltd, honed in on claims by Mr Wright's family to equity in part of Hope Downs and a share of the royalties.
In fact, he told Justice Jennifer Smith that "properly analysed", Wright Prospecting's case "is a simple one and one that can be disposed of in relatively short order".
"WPPL (Wright Prospecting Proprietary Limited) seeks to make the case much more complicated than it is and your Honour will not be distracted or beguiled by unnecessary complication," he added.
Wright Prospecting's case for a royalty share in three of the Hope Downs tenements rests on the basis that they were part of a partnership agreement between Mr Hancock and Mr Wright.
It asserts that means it is entitled to its half of the 2.5 per cent in royalties that Mr Wright and Mr Hancock's partnership Hanwright secured in an agreement with Rio Tinto's subsidiary, Hamersley Iron, in the early 1960s.
Wright Prospecting acknowledges that Hancock Prospecting removed those Hope Downs tenements from their partnership, as they were allowed to do under a 1987 agreement, but that the same agreement stated they should still receive royalties from that asset.
As for the rest of the Hope Downs tenements, previously known as East Angelas, Wright Prospecting claims it has always remained an asset of the partnership and it should then receive an equity share in those tenements, potentially worth several billion dollars.
Mr Hutley said Hancock Prospecting's response to that was straightforward.
He told the court Hancock Prospecting exploited Hope Downs after Wright Prospecting "relinquished any right it had to those areas" under the 1987 agreement.
Crucially, he said, Hancock Prospecting was only required to share with Wright Prospecting any royalties that were received from third parties, such as Rio Tinto, if they were received by the partnership.
"There have never been any royalties received by the partnership from third parties," he said.
'These clauses are fatal'
Regarding the East Angelas tenements, Mr Hutley said Hancock Prospecting took up the exploration licenses on its own account as permitted under the 1987 agreement.
"It necessarily fails if the other claims fail," he said of the East Angelas claim.
At the heart of the Hancock Prospecting case, he said, were several clauses of the 1987 agreement.
"Properly construed, these clauses are fatal to WPPL's proprietary and royalty claims," Mr Hutley said.
Mr Hutley also addressed revelations in earlier hearings by Wright Prospecting's lawyers of "significant evidence" that Mrs Rinehart has known since at least 1986 that Hope Downs was part of a partnership between her father and Mr Wright.
In the letter from her father dated February 20, 1986, Mr Hancock referred to the Hope Downs tenements, including East Angelas, as jointly held for the Wright Prospecting and Hancock Prospecting partnership.
The letter was a key piece of evidence in Wright Prospecting's claims it was improperly denied royalties and equity.
Letter of 'peripheral relevance'
In court today, Mr Hutley sought to play down the significance of the letter.
"It is, at its highest, of the most peripheral relevance in this case," Mr Hutley said.
"If anything, far from this document being adverse to our case, in fact it supports our case to the extent that it has any relevance, and we embrace it."
He said it confirmed Mr Hancock and Mrs Rinehart understood there was a valuable opportunity for the partnership to obtain rights to the East Angelas reserves.
But he said this was resolved in the 1987 agreement between the parties, where it was decided Hancock Prospecting could take up the East Angelas areas "for its own benefit".
At no time, he added, did the partnership hold a "legal or equitable" interest in the East Angelas temporary reserves.
Previous hearings have also heard of a meeting Mr Hancock held six weeks after Mr Wright's death in September 1985 with Mr Wright's children, including the now-deceased Michael Wright and mining heiress Angela Bennett.
According to a recording of the meeting, Mr Hancock said of the Hope Downs tenements "these are Hancock and Wright areas".
Next week, the trial is expected to hear the opening address by counsel for Ms Rinehart's children John Hancock and Bianca Rinehart, who have their own claim for part ownership of Hope Downs and Hancock Prospecting.