Guest's letter, released to the Herald on Sunday under the Official Information Act, went on to say that compensation could be paid despite uncertainty over his innocence.
"That Mr Bain spent 13 years in prison and then was acquitted at a second trial might be seen as an 'exceptional circumstance', but a finding that he is innocent is not a correct conclusion."
Speaking to the newspaper yesterday, Guest, struck off for professional misconduct in 2001 for lying to a client and taking $25,000 more in costs than he was entitled to, said the Bain case was different to anything covered by Cabinet rules.
"Here is a situation that is extraordinary - regardless of guilt or innocence."
Bain supporter Joe Karam, meanwhile, has proved Binnie went to some lengths to understand New Zealand law. Papers released to him reveal Binnie received advice from University of Auckland law school experts, including a 28-page dossier from Professor Paul Rishworth and Associate Professor Scott Optican.
"To suggest he (Binnie) charged in without understanding New Zealand law is a nonsense," Karam said.
Before releasing the Binnie report, Collins said it contained assumptions based on incorrect facts, showed a misunderstanding of New Zealand law and lacked a robustness of reasoning to justify its conclusions.
"Put simply, it would not be acceptable to make a recommendation to Cabinet based on a report that would not withstand the considerable scrutiny it would attract," she said.
Yesterday neither Rishworth nor Optican would comment on the advice they gave, which related to eight points of law.
Karam this week had a request for a formal meeting with Collins rejected, and said it proved she "sees this as an adversarial battle between me and them rather than an effort to act in the interests of natural justice in the proper way".
He had wanted to meet the Minister to find a solution to the stalemate that would not involve "a bitter public battle".
A spokesman for the Minister said she had consulted the Ministry of Justice on the request and had been advised it would be inappropriate while the Bain claim was before her.
"I understand this delay has been frustrating for Mr Bain's supporters, but I believe it is vitally important a proper process is undertaken - one that is in the interests of justice, will withstand public scrutiny and that will enable a final conclusion to this chapter in our history," Collins said.