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The family of late mining magnate Peter Wright have told a court his former business partner Lang Hancock's companies have breached their duties under a decades-old agreement over billions of dollars of iron ore assets in Western Australia's Pilbara region.
Key points:
- The case centres on an agreement made by Lang Hancock and Peter Wright in the 1970s
- Wright Prospecting claims it was denied shares and royalties from Hope Downs tenements
- It says this amounts to a breach of duties outlined in the original agreement
Lawyers for descendants of the two iron ore dynasties, including Hancock Prospecting's Gina Rinehart, are battling it out in a civil trial in WA's Supreme Court that began today and is expected to last at least three months.
John Rowland KC, for the Wright family, told Justice Jennifer Smith their claim against Hancock Prospecting was "relatively simple" despite much "background noise" around the high-profile case and the fact 15,000 pages of submissions had been tendered to the court.
More than a decade in the making, this legal showdown centres on royalties from and ownership of the Hope Downs mines and deposits in the Pilbara's remote Hammersley Ranges.
The iron ore rich tenements were held by both Hancock and Wright as part of their business partnership, sometimes referred to as Hanwright, in the 1970s.
In 1978, the two men negotiated an agreement on how to divide and manage their iron ore assets, with amendments made to the agreement several times in the 1980s.
Wright Prospecting 'denied' royalty payments
Wright Prospecting claims it was improperly denied shares in three of the Hope Downs tenements and equity in three more Hope Down tenements, previously known as East Angelas.
In his opening address, Mr Taylor said Wright Prospecting contended Hancock Prospecting had "breached its duties" under their agreement through its development of Hope Downs, which is currently jointly owned and operated by Hancock Prospecting and Rio Tinto.
The Wright family acknowledged Hope Downs tenements 1, 2 and 3 had been assigned to Hancock Prospecting as part of their agreement, and Hancock Prospecting decided to remove the asset from the business partnership, as it was allowed to do, when mines were developed with Rio Tinto.
The Wrights argue that under the agreement, Hancock Prospecting was still obliged to keep paying them half of a 2.5 per cent royalties deal with Rio Tinto but never has.
It wants those royalty rights restored and back pay for decades of previous royalties. Lawyers for Wright Prospecting estimated this could amount to hundreds of millions of dollars.
Wright Prospecting is also arguing in court that it should have a share in the Hope Downs 4, 5 and 6 tenements.
It claimed these tenements were never assigned to either party under their agreement and so had always remained a shared part of their Hanwright partnership.
The tenements were at one point taken back by the state WA government, until Hancock Prospecting was allowed to buy them back in 1989.
Wright Prospecting is trying to convince the court that Hancock Prospecting actually bought the assets "for the benefit of the Hanwright partnership" and it should therefore be granted a part ownership share, which could be worth several billion dollars.
Iron ore rights a joint effort
Julie Taylor SC, also appearing for Wright Prospecting, told the court under the agreement the partners had obligations "not to convert the commercial opportunity for their own interests or that of their related entities".
Hope Downs 1 has been mined by the Hancock Prospecting and Rio Tinto joint venture since 2007 and Hope Downs 4 since 2013.
Lawyers for Wright Prospecting are going through documents and letters stretching back to the 1960s in detail to show that, they say, both Hancock and Wright were involved in lobbying and pressuring governments for rights over iron-ore rich land and eventually securing tenements for their partnership.
They are trying to demonstrate that the Hope Down tenements, including efforts to regain the East Angelas sites from the state government, were a joint effort by the men and that Wright Prospecting is therefore entitled to interests in the mines and deposits.
This trial also involves Gina Rinehart's children, who have been joined to the case by Wright Prospecting.
John Hancock and Bianca Rinehart are themselves embroiled in a legal dispute with their mother over the ownership of Hancock Prospecting and claims to Hope Downs tenements.
Wright Prospecting has brought them into this case with the intention of binding them to any decision of the court.