The West

Gina Rinehart. Picture: Ben Crabtree/The West Australian.
Gina Rinehart. Picture: Ben Crabtree/The West Australian.

Gina Rinehart has failed in a legal bid to keep hold of a 25 per cent stake in the rich Rhodes Ridge iron ore deposit in the Pilbara, which was pegged by her late father Lang Hancock.

The Court of Appeal today rejected an appeal by Mrs Rinehart's flagship company Hancock Prospecting against a decision to award the company's stake in the multi-billion dollar Pilbara deposit to the descendants of Mr Hancock's late business partner Peter Wright.

Wright Prospecting won a Supreme Court ruling in March 2010 that increased its stake from 25 per cent to 50 per cent of the three billion tonne iron ore deposit.

The other half is owned by Pilbara mining giant Rio Tinto under a joint venture agreement from the heyday of the Wright-Hancock prospecting partnership.

Justice Michael Murray found in favour of Wright Prospecting, which was then controlled by Mr Wright's adult children Angela Bennett and Michael Wright, after nine years of litigation.

Michael Wright died in April this year and is believed to have left his stake in the company to his children.

Mr Wright and Mr Hancock, who were close friends, struck a deal in 1984 to carve up their assets in a bid to avoid what Mr Hancock feared would be fights between their descendants.

Rhodes Ridge was at the top of the list of projects earmarked for the sole control of Wright Prospecting.

Mr Wright died unexpectedly while on business in Thailand in 1985 and Mr Hancock died in 1992 after continuing to manage the interests of both the Wright and Hancock families despite failing health.

In 1997, the Wrights demanded that Hancock Prospecting hand over its 25 per cent stake in Rhodes Ridge, but the Rinehart-directed company claimed the 1984 carve-up was superseded by a 1989 management deal.

Justice Murray rejected this claim and also rejected allegations that Wright Prospecting had concealed evidence about correspondence with Mr Hancock when the prospecting legend was very ill in late 1991. A letter to Mr Hancock drafted by Wright Prospecting in 1991 was not disclosed initially but was handed over later.

Hancock Prospecting claimed the letter would have shown that Michael Wright and Mrs Bennett had engaged in "deliberate deceptions in relation to Mr Hancock, such as he was allowed to go to the grave under the apprehensions they had engendered about their states of mind".

Justice Murray said it seemed clear that Michael Wright did not want a confrontation with the very ill Mr Hancock yet was keen to advance the idea that he and his sister would control negotiations about Rhodes Ridge's development without Mrs Rinehart's involvement.

In its appeal this year, Hancock claimed Justice Murray was wrong to rule the 1989 agreement invalid.

The agreement outlined moves by Mr Hancock to sell Rhodes Ridge to a third party and share the proceeds between both mining dynasties.

The Court of Appeal president Justice Carmel McLure said the 1984 agreement was unambiguously clear.

A series of communications in 1989 do not individually or collectively form an inference that the 1984 deal was no longer operative, Justice McLure said.

The West Australian

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