Rinehart – Trusting in Bianca to take control
Another chapter was written yesterday in the ongoing Rinehart family dispute. The New South Wales Supreme Court appointed Bianca Rinehart as trustee of the Hope Margaret Hancock Trust, giving her control of the trust fund with an estimated value of $5 billion dollars. In giving his judgment, Justice Brereton commented that Gina Rinehart has gone to extraordinary lengths to maintain control of the trust and had exerted ‘enormous pressure and great influence to do so’.
Court considerations in appointing a trustee
When appointing a trustee, the Court is required to take into account whether the trustee is suitable having regard to the interests of the beneficiaries and the circumstances of the case.
The welfare of the beneficiaries is the dominant consideration of the Court.
Who to appoint?
During the hearing, the Court was presented with a number of propositions. Mrs Rinehart, who previously resigned as trustee in November 2013, proposed a licensed trustee company be appointed to manage the trust. Justice Brereton commented that this option did not provide ‘adequate assurance of independence’.
Justice Brereton appointed Bianca Rinehart, commenting that she was ‘better suited than any of the alternatives to administer this trust in the prevailing circumstances’.
Change in trustees
As part of the changing of the guard, a timetable has been set down for a number of steps to take place, including Mrs Rinehart providing the trust documents to Bianca Rinehart, and a sworn statement of account of all funds received by the trust and distributed by the trust. Bianca Rinehart then has a right to apply to the Court to examine Mrs Rinehart regarding the accounts.
Is this the end?
Gina has not indicated whether she will appeal the New South Wales Supreme Court decision. There are also separate Federal Court proceedings that return to Court in June between John and Bianca, and Gina, regarding profits from iron ore projects.
A famous politician once said ‘Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning’. Those words may be the best way to describe the ongoing family dispute. Time will tell.
This decision serves as a reminder that the Court will focus on what is in the best interests of the beneficiaries of a trust when there is a dispute regarding the trustee of a trust.
While the Rinehart dispute continues to capture headlines, we see and advise on these circumstances on a regular basis. Our experience in working with families is that being proactive and planning for succession helps to reduce family disputes, and also manages expectations of the family members involved.
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