"I was always a bit annoyed at that, we lost to a short film that was really short - two minutes long," he said.
Fast-forward five years, Hammon is working in a pharmaceuticals warehouse while Jackson continues his amateur film career but holds down a day job as a picture engraver at Wellington Newspapers.
Jackson, with a secondhand 16mm Bolex camera he'd saved up to buy while living at his parents' Pukerua Bay home, hatches a plan to shoot a 10-minute film for the Wellington Film Festival.
He tells a rabble of work colleagues and old school mates, including Hammon and childhood friend Pete O'Herne, a Ministry of Transport clerk, that he needs their help.
"The original idea was a guy who was collecting for a charity to fight starvation. He goes to a small town where these strange hillbilly people eat him," says Hammon, who co-wrote the screenplay for what would become the cult classic Bad Taste.
"It was originally called Roast of the Day but it just kept growing and growing and at some point we decided those strange hillbilly characters were aliens in disguise."
Hammon remembers the filming process as not particularly fun or glamorous work; hours of what seemed mad, pointless shooting and lugging Jackson's equipment around Makara, Porirua and Pukerua Bay usually on cold wintry Sundays when virtually all the cast and crew were hung over.
"We absolutely never had a script and because of that often had a hard time getting ourselves out of some of the impasses we found ourselves in," said Hammon, who doubled for everyone on the film and was killed 23 times in various ways.
"But if we messed something up we could go back the next week and do it again, there was a lot of stuff that was never used."
Craig Smith, who was working for the Housing Corporation and a mate of Hammon, remembers Jackson pitching the idea to him and saying filming should be wrapped up in "about six weeks".
Smith played the character of Giles as the project dragged on for weeks, and then months, as the plot changed and Jackson came up with more ideas and elaborate action scenes.
After a year, Jackson had shot enough for their short film to go to almost feature length as a number of external factors shaped the film.
"There were marriages and divorces. One of us had cancer, three or four of us left the film and had death scenes filmed - and then came back into it," said Smith.
"I had a problem with drugs and fundamentalist religion. Terry [Potter] decided to go to Australia but it didn't work out so he came back. Something happened with Mike too but he came back so all that shaped the story too."
Months turned into years as Jackson's ideas kept getting bigger, costlier and crazier.
"At one stage Pete is saying 'okay, we're going to have this flying car' and he built this model of me and this car, and of course that went nowhere.
"The exploding sheep was supposed to be a rabid sheep chasing Pete O'Herne. Of course we couldn't get it to chase us so Pete goes 'okay, let's scare the sheep, get it running in one direction and make it look like it's chasing you', then it falls off a cliff and we waste a whole day trying to save it."
Smith began to think their project would never end and remembers miserable and wet Sundays when he and Hammon would sit and talk, anything to stop them from filming. The constant change was a grind and the only thing that held them together as a group was the camaraderie.
Jackson approached the New Zealand Film Commission who, apprehensive about a splatterfest, twice turned down his funding requests.
But the commission's chief executive, Jim Booth, recognised the talents of Jackson who often sent him epic letters updating him on progress.
Ian Pryor, who wrote an unofficial Jackson biography called From Prince of Splatter to Lord of the Rings, said Booth would drip-feed Jackson with $5000 cheques to keep his project going.
He eventually persuaded the NZFC board to give $207,000 towards the film's $295,000 budget to complete it.
Pryor said the commission didn't hold high hopes for Bad Taste and before it was finished and polished an internal report stated: "The only market for this film is video".
"In the publicity booklet they took to Cannes promoting the Kiwi movies that were screening that year, Bad Taste was tucked in at the back."
The film was released in December 1987, 25 years before the release date of the first Hobbit movie.
Lindsay Shelton, NZFC's former marketing director, said Jackson was in his mid-20s but already showing promise as a film-maker with an "extraordinary" attention to detail and constructive ideas for the film's production, marketing, sales and promotion. "Peter provided the key image for the marketing which was an alien with a machinegun and its finger in a rude position," says Shelton.
"The film distributor in France tried to be clever and changed the image and the film didn't work there. We said it was his fault for not using Peter's original image."
Bad Taste eventually became profitable, earning several times its budget and providing royalties for some of those who had contributed financially to it, such as Hammon who received about $70,000.
But despite the film selling well, when Shelton took it to Cannes in 1988, with Jackson in tow on his first overseas trip, he said it was difficult to market to overseas audiences because of its ultra-violence and gore.
"Virtually everyone in the film business admired it and thought Peter was a great talent but some of the shots may have been too much in their particular countries."
Nonetheless, big American movie houses were keen on the fledgling New Zealand director and after seeing Bad Taste, Shelton said they began monitoring his evolving talents.
Shelton looks at Jackson's splatter period and Heavenly Creatures as a "research and development" phase for New Zealand film - and a trial for his Hollywood masters.
"It was Heavenly Creatures that proved to them he could actually make films that American audiences were able to cope with."
Tony Hiles, who came on board the Bad Taste crew as a consultant producer when the NZFC decided to back it, remembers seeing Bad Taste for the first time.
"It was sort of foundering as people left or gave up. Pete arranged to meet me in my editing suite so we took a look at what he shot and I thought, 'I ain't seen nothing like this before'."
"I really liked the cast. It made me laugh. It was funny, corny and it was clever and very inventive; all the inventions were well and truly on display."
Hiles helped rewrite the screenplay and was convinced then that Jackson was exceptional.
He told Booth: "This guy is going to be very successful".
Booth would eventually quit the NZFC and become a producer for Jackson.
"Film-making wasn't a passion with him but an obsession.
"He had this room under his mum and dad's house where he built camera equipment, props, masks, weapons - it was almost a narrow focus of how to do everything."
Hammon said he has had next to no contact with Jackson since the late 1990s when the producer took him, O'Herne and Smith on a tour around Wingnut films.
He said there was no rift or falling out, just a single-minded and relentless Jackson moving on - and not bothering to call.
"There's no way around it; in the 1990s you could see which way the wind was blowing and it was pretty clear that he was moving on but, yeah, it is disappointing.
"The last few times I spoke to him in the late 1990s there was this total perception he had no time. While we were at Wingnut he showed me these logs which had every quarter hour of his day logged - he even had time to spend with his children logged.
"The last time I saw him he said, 'I'll call you again in a few weeks' and that was in 2000. As far as I know, he still feels pretty good about us and he did go to Pete O'Herne's funeral at Pukerua Bay."
Smith's take on their parting was different. He said none of the group begrudged their old friend's mega-success, but they were unhappy about the manner in which he ditched them as soon as Bad Taste was over.
"Everybody does feel resentful. He was a friend who just dumped us, who just turned his back once he got what he wanted out of us but that's why he is a success. We all felt a little bereft, for us personally he treated us like shit and we deserved better.
"We would have liked him just to acknowledge us, if you like. Bad Taste was a group effort, it was the sum of many parts; whether you liked the film or not it was not one man's vision."
Minett, semi-retired and living in Wellington after being made redundant two years ago, declined to talk.
But he said, almost poignantly, in an email: "You know that PJ doesn't talk to us at all?"
Hiles said without the likes of Minett, Smith and Hammon, the project and a vital piece of New Zealand cinema history and industry may never have been made.
"It's probably the downside of obsession, it doesn't actually always involve thoughtfulness," he said.
"I do remember after the film was finished I used to meet up with the guys for a beer and I remember Mike Minett saying to me, 'have you seen Pete?', and he would say 'we've never heard from him, we never see him'.
"That was the stake in the ground, he was off like a robber's dog."
Hammon has had bit parts as extras in some of Jackson's films including as a hobbit at Bilbo Baggins' birthday celebrations in The Fellowship of the Ring.
He said the boys were still on the guest list and were invited to The Hobbit premiere in Wellington "but we won't necessarily see him there".
Bad Taste
Released: December 1987.
The film is sold to a number of countries at Cannes in 1988 but not expected to do well.
Budget: $295,000
Shooting time: About four years
Production Co: Wingnut Films/New Zealand Film Commission
Producer/photography: Peter Jackson
Consultant producer: Tony Hiles
Screenplay: Peter Jackson, with Tony Hiles, Ken Hammon
Post-production supervisor: Jamie Selkirk
Sound: Brent Burge
Music: Michelle Scullion
Cast:
Mike Minett
Terry Potter
Pete O'Herne
Peter Jackson
Craig Smith
Doug Wren
Shooting locations: Porirua, Makara Beach, Pukerua Bay, Titahi Bay, Wellington.
The Hobbit
Worldwide release: December 2012
Budget: $613,000,000 for the trilogy
Shooting time: 266 days for The Hobbit, An Unexpected Journey
Production Co: Warner Bros, New Line Cinema, Metro Goldwyn Mayer, Wingnut Films
Director: Peter Jackson
Writing credits:
Fran Walsh
Philippa Boyens
Peter Jackson
Guillermo del Toro
J.R.R. Tolkien
Cast (includes):
Martin Freeman
Lee Pace
Hugo Weaving
Sir Ian McKellen
Billy Connolly
Elijah Wood
Cate Blanchett
Richard Armitage
Christopher Lee
Andy Serkis
Aidan Turner
Ian Holm
Shooting locations: Tekapo, Te Anau, Rock and Pillar Range, Earnslaw Burn, Piopio, Hinuera Valley, Lake Pukaki, Mangaotaki, Mt Ruapehu,
Pinewood Studios (UK), Stone Street Studios, Strath-Taieri.
Bad Taste v The Hobbit
* Peter Jackson acts, writes, produces and directs Bad Taste. He also does the cinematography, film editing, makeup and special effects.
* On The Hobbit, Jackson is a co-writer for the screenplay, the film's director and producer.
* About 50 of Jackson's friends were cast and crew in Bad Taste.
* The Hobbit has a staff roster of several hundred and a stellar cast of A-listers including Cate Blanchett, whose net worth is $45 million.
* Bad Taste has an art department staff of one. The Hobbit has an art department staff of 57.
* There are 45 people in The Hobbit's make-up department. When Bad Taste was filmed, Peter Jackson did the make-up and was assisted by just one other person, Cameron Chittock.
* Bad Taste doesn't have a visual effects team - its special effects are done by Jackson himself.
* The Hobbit has a visual effects staff roster of more than 400 people.
* Bad Taste is shot partly on Jackson's 16mm Bolex camera. The Hobbit will appear in 3D and in IMAX cinemas at 48 frames a second.
Read more: Sour taste for Jackson's first cast
