The Cabinet will decide in the new year whether to order a fresh review of David Bain's compensation claim, after the Justice Minister rejected an independent report by a Government-appointed retired judge.
Mr Bain is seeking compensation for wrongful conviction and imprisonment for 13 years in jail. In 2009, he was acquitted at a retrial of the murders of his parents and three siblings at their Dunedin home in 1994.
On Thursday afternoon, Judith Collins released Canadian judge Ian Binnie's report and a peer review report that she ordered on it.
Justice Binnie's report recommends that David Bain be paid compensation. He says acts and omissions by the Dunedin police played a significant role in Mr Bain's wrongful conviction for the murder of his family.
The judge, who sat on the Supreme Court, says the physical evidence compels the conclusion that it is more probable than not that Mr Bain's father Robin Bain killed his wife and three children, before killing himself.
Ms Collins said earlier that the judge's report contained assumptions based on errors of fact and showed a misunderstanding of New Zealand law and she ordered the peer review by a New Zealand lawyer.
The review by Robert Fisher, QC, also says the judge was not asked to recommend whether Mr Bain be paid compensation, but to decide whether he was innocent on the balance of probabilities. It says Justice Binnie went beyond his mandate and made fundamental errors of principle.
Judith Collins said on Thursday that Mr Fisher's review confirms that Justice Binnie's report is flawed and would not withstand scrutiny. She said errors include him excluding significant evidence such as blood stains on David Bain's clothing and fingerprints on the rifle, and his admissions after the event.
"Mr Binnie regarded the jury acquittal as something that was relevant to whether Mr Bain had proved his innocence. Mr Binnie's approach was markedly generous to Mr Bain in its reliance on background facts sourced from him."
Meanwhile, Justice Binnie says much of Robert Fisher's analysis seems to arise from his lack of familiarity with the material he was asked to review.
Judith Collins said she wants to make sure that David Bain gets a fair deal in having his compensation claim considered by the Cabinet. She said though Mr Bain does not have an entitlement to compensation, he does have a right to have his matter considered.
"If I'd put up the report that Mr Binnie gave me as something for the Cabinet to rely on then, frankly, I would've got laughed out of the place, based on what was obvious errors that anyone with legal training in New Zealand under New Zealand law could see."
Ms Collins said she would ask the Cabinet in the new year whether to consider Justice Binnie and Dr Fisher's reports together, or whether a new review should begin.
It is the Cabinet's role to determine how much compensation should be paid. Justice Binnie has never been required to give an amount.
The Binnie report cost about $450,000, while Dr Fisher's review cost about $100,000.
Bain lawyer criticises peer review
The lawyer for David Bain says he is deeply disturbed about the process followed since the Justice Minister received the independent report his client's compensation claim three months ago.
Michael Reed, QC, told Radio New Zealand's Checkpoint programme on Thursday that the process has been one-sided and secret.
He said police and Crown Law got the report immediately and their reports went to the independent peer reviewer Robert Fisher, QC, but Mr Bain's team received nothing until Thursday.
Mr Reed said there are clear errors as to the facts in the review because of the information Mr Fisher was given and it is grossly unfair.
He believes if the minister orders another review of the compensation claim, it is unlikely that another overseas judge would touch it.
"I suspect they'll think we're a banana republic now, but that's the problem. It's no good getting an internal report from anyone - it'll never be accepted by half the population because it is home-grown.
"That's why they went overseas, that's how it should be. I reject totally any home-grown report from people who have been involved in Bain all these years."
Police reject report's findings
Police say they do not accept Justice Binnie's findings about he way they handled the Bain case.
In a statement on Thursday, Police Commissioner Peter Marshall said police do not accept that the investigation by Dunedin officers contained egregious errors, or that there was a failure to investigate the possibility of innocence.
He said the weight of evidence pointed to David Bain as the killer, with that evidence put before the court. Mr Marshall said some errors in the investigation were made and were all thoroughly traversed by the courts.
Reviews of the 1994 investigation found that it was conducted in accordance with the standards or the day and without fear or favour, he said.