PM 'avoiding' Pike River payout

01:45, Nov 14 2013
Kim Dotcom
NOT LIABLE: Key said volunteering to pay compensation could create a dangerous precedent.

Prime Minister John Key says families of Pike River victims will have to take the Government to court in order to win compensation from the Crown.

This week Key confirmed that Attorney General Chris Finlayson had told Cabinet that it saw no legal recourse for the Crown to be liable for compensation which the courts ordered Pike River Coal to pay.

Pike River Coal is in receivership, and New Zealand Oil & Gas, the company's founder and cornerstone shareholder, voted not to pay the compensation.

In Parliament yesterday Key said the Government believed there was no course of action which would find the Crown liable, and that volunteering to pay could create a dangerous precedent.

''Obviously, the legal representatives of the family are free to test that case in court. But the Government is also a guardian of taxpayers' money, and it would need to be very careful about any precedent that it might set,'' Key said during Question Time.

''There are plenty of New Zealand companies that, for instance, go broke and actually do not end up paying redundancy payments that are owing to those workers. So that situation is another situation that the Government would have to avoid.''

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Labour leader David Cunliffe said Pike's report into the mine explosion found systemic failures by several Government departments.

Cunliffe signalled that Key should tell Crown agencies which invested in Pike River to arrange a payment.

"Two of the shareholders in Pike River Coal were also Crown agencies - ACC and the New Zealand Superannuation Fund,'' Cunliffe said in a statement.

"There is nothing stopping the Prime Minister making a couple of quick phone calls to the chairs of those boards and setting expectations about a pay-out in some shape or form.''

Pike River families' lawyer, Nick Davidson QC, said families received the news that the Government had refused to stump up with the $3.41 million reparation ''with an air of resignation and sadness''.

In July, Judge Jane Farish fined the company $760,000 and ordered it to pay $110,000 reparation to each of the 29 victims' families and the two survivors.

However, Pike River Coal's receivers had told the court it had no money to pay reparation and the mine's major shareholder, New Zealand Oil and Gas, had also refused to contribute.

Davidson had tried to persuade the Government to pay reparation to Pike families, many of whom were suffering significant financial impacts from losing their loved ones.

The royal commission into the tragedy found the then Labour Department should have issued a prohibition notice when Pike started hydro extraction of coal in September 2010 because the mine lacked a second emergency exit.

''We don't know exactly why the mine blew up but the fact is, it should have been shut down,'' he said.

The royal commission's report also highlighted that the Government's mining inspectorate had substantially declined since new health and safety laws were introduced in 1992.

It had ignored warnings that the changes could be disastrous for mining, Davidson said.

He said it was not a bid to set a precedent, as Prime Minister John Key had wrongly claimed when announcing that Cabinet would not cover the reparation.

''I've said 'Reflect on the failure of the Government and do something for these families'.''

Leeza Verhoeven, mother of Zen Drew (Verhoeven), 21, who died in the blast, was strongly opposed to Government claims that it was funding efforts to re-enter Pike's 2.3km tunnel so was unable to afford to pay reparation.

''That's the equivalent of us using our reparation to pay to get into the drift.

''For me personally, I think it stinks that the Government has said they won't even look at the matter.''

She was disgusted the Government announced last month it would give $5 million to Team New Zealand with no strings attached while the team decided whether to mount another challenge for the America's Cup yacht race.

''It's a rich man's sport. Why is the Government putting money towards that when our men have been killed and they are saying 'Tough luck'?''

One former Pike River shareholder had contacted Davidson to offer to pay some money towards the outstanding reparation, a gesture that had touched the families.

He said he would let the issue settle ''because the families can't take any more disappointment.''

Tomorrow, the latest book into the tragedy, Tragedy at Pike River by journalist Rebecca Macfie, will be launched in Greymouth.

The disaster's third anniversary is next Tuesday and work is continuing to prepare the mine's tunnel for re-entry, which is unlikely before next year.

The Press