Hope Downs trial: Gina Rinehart’s legal team sets out opening argument in Pilbara minesite royalty case

The extensive legal team fighting for Gina Rinehart to maintain her grip on the lucrative Hope Downs mines have begun opening their case — starting with a microscopic investigation of a 50-year-old royalty deal that could now be worth hundreds of millions. The trial of Wright Prospecting vs Hancock Prospecting entered its third week on Monday, with lawyers for Mrs Rinehart’s powerhouse resources company given their turn. Noel Hutley SC — whose previous clients have included James Packer, Rupert Murdoch’s News Corp and the Commonwealth Bank — will be doing most of the talking as Hancock lays out their case. Mr Hutley’s legal fee has previously been put at around $20,000 a day. And he spent the first half of his first day fighting back against a claim by the company founded by oft-forgotten Pilbara pioneer Don Rhodes — who claim they are owed 1.25 per cent of the royalties from some of the Hope Downs resource. An agreement drawn up between Mr Rhodes and Lang Hancock in 1969 is the linchpin to that argument. Eight years ago, Hancock Prospecting unsuccessfully applied to have the entirety of that claim thrown out. And so, Mr Hutley said the words drawn up when Mrs Rinehart was just 15-years-old spoke for themselves — and meant there were “fatal” flaws in their lucrative claim. He pointed out that the rights of occupancy to the mining reserves held by the Rhodes company, DFD Rhodes, and another group, known as the Nicholas brothers, expired without renewal in 1969 and 1979. “No ore was ever produced by anyone from any of the rights of occupancy or before the cancellation of the temporary reserves,” he said. “We submit that no mining tenements ever ‘issued from the reserves in issue as contemplated’, which we submit is fatal to the Rhodes royalty claims.” Mr Hutley accused the Rhodes lawyers of “stretching language”, and even ignoring basic grammar within the deal. He said other parts of the Rhodes’ argument created a “ungrammatical word salad”. And in relying on another phrase in one of the 1969 clauses — “in the area of” — Mr Hutley said the Rhodes side had expanded their claim out to around 20,000 square kilometres, an expanse the same size as Slovenia or Israel. He also alleged that Rhodes drove a “very hard bargain”, demanding a non-refundable $1 million fee — worth $11 million today — to complete the deal with Hancock. “A huge upfront non-repayable royalty payment for the promises that they gave. A hard-driven, successful deal for Rhodes,” he said. “To say this was some harsh bargain ... is wholly ill-conceived. They cut what must have been see as a very good deal. That is the true context when one analyses these promises” Ultimately, Hancock says Rhodes shouldn’t get a cent in royalties out of the joint venture between Hancock and Rio Tinto. In the coming days, Hancock’s defence will shift to the claim by Wright Prospecting, who are not only claiming royalties from some of Hope Downs, but also ownership of a portion of it — based again on historic agreements and documents dredged up from WA’s mining archives. The most stinging portions are likely when Ms Rinehart’s lawyers address the claim of her children against her, a claim which they say involved fraudulent manoeuvres to remove a huge slice of the Hancock empire from their reach. Ms Rinehart says that claim is also without merit — and should not be in the Supreme Court at all, given it is the subject of a confidential arbitration being overseen by former Chief Justice Wayne Martin. The trial continues.