Gina Rinehart acted with "gross dishonesty" and "deceitfully" in her dealings with the multibillion-dollar family trust, according to her three oldest children.
Australia's richest person was also accused of threatening them with bankruptcy if they did not agree to her retaining full control of the trust.
Their allegations and counter-claims from Ms Rinehart and her youngest daughter, Ginia, were made public today, six months after the eldest children launched their lawsuit in the NSW Supreme Court.
Court documents reveal the bitter dispute between family members over the control of their substantial wealth.
John Hancock, Bianca Rinehart and Hope Welker want to oust their mother as trustee of the family trust and replace her.
The Hope Margaret Hancock Trust was set up in December 1988 by Gina Rinehart's father, Lang Hancock, with her children being the beneficiaries.
The trust reported a profit of $2.01 million in the financial year to June 30, 2011, up from $1.01 million the previous year.
Ms Rinehart contacted her children in early September 2011, days before her youngest turned 25, when all four were due to receive their share of the trust.
The iron ore magnate warned them the vesting of the trust on September 6 would render them liable for a substantial amount of capital gains tax and lead to their bankruptcy.
To avoid financial ruin, they should sign a new deed giving her long-term control, she said.
Among their misconduct claims, the children say their mother secretly changed the vesting date of the deed to 2068.
In her email of September 3, Ms Rinehart told her son: "Bankruptcy is not in the interest of the beneficiaries.
"It may however be reasonably arguable that personal development wise it would be in the best interests of the beneficiaries to force them to go to work and reconsider their holidaying lifestyles and attitudes."
Both sides contend the other party was unsuitable to be a trustee.
Ms Rinehart said she is the most appropriate person.
She said that since her father's death in 1992, she had "manifestly improved the fortunes of and substantially increased the value" of Hancock Prospecting Pty Ltd.
Her three children were unsuitable to serve as trustees for "many reasons" including the fact that none worked or lived in Australia.
None had the "requisite capacity or skill, nor the knowledge, experience, judgment or responsible work ethic, to administer a trust of the nature of the trust, in particular as part of the growing HPPL Group".
But the three said their mother "breached her duty to act honestly and in good faith".
They also say she acted with "gross dishonesty" and acted "deceitfully" in her dealings with the beneficiaries of the trust.
They say their mother "unconscionably and deliberately" gave them a single business day in which to make the decision whether or not to agree to a new deed.
Their youngest sister, Ginia Rinehart, referred to a history of mutual conflict, saying the siblings did not trust her or each other with the administration of the trust.
Her three siblings were not "fit and proper persons to be trustees" as they lacked the requisite degree or confidence in one another.
Gina Rinehart said she "is publicly acknowledged as one of the foremost global figures in the resources (non oil and gas) industry and as one of Australia's leading businesspersons".
She was "uniquely placed to administer the trust and says that the beneficiaries have enjoyed a privileged life" as a result of expenditure of trust funds and Ms Rinehart's own funds.
The three children refer to "repeated attempts to place emotional, financial and legal pressure" on them.
Hope Welker referred to a September 11 email from Senator Barnaby Joyce, who said he had spent time in recent years with her mother, and said litigation against a family member can cause a terrible strain on marriage and children.
He also said that "before it gets really out of hand, I would try to get it back in house and out of public view".
A September 19 email from MP Alby Schultz and his wife was also cited, in which they said they had read with "much sadness" of the litigation, saying the commencement of the proceedings was "a horrific step".
According to the trio's statement of claim, Hancock Prospecting chief financial officer Jay Newby emailed Bianca Rinehart on September 6.
He said should she immediately withdraw from the litigation, her mother was prepared to offer her a quarterly distribution in an amount to be agreed and asked her to suggest a figure.