Erebus crash cash revealed

Hundreds were killed in Antarctica. Photo / NZ Herald

The families of those who died when Air New Zealand Flight 901 plunged into Mt Erebus received an average pay-out of only $100,000 - and they have been sworn to secrecy all these years.

The same year, an Auckland woman who was badly burned in a Pan American crash was awarded much more by a US court.

Compensation for the 200 New Zealand passengers on the doomed 1979 Antarctic flight totalled about $21 million, according to calculations based on new disclosures.

About a third of the compensation ($6.9m) was paid by the Government after Civil Aviation was named in a class action brought by a passenger consortium. That amount showed up in the 1982 Budget.

In addition to the $21m, a further $4m was paid out to the families of 24 Japanese passengers on the flight.

An Air New Zealand spokeswoman would not confirm the amounts, saying the Erebus settlements were confidential between the airline and the families.

But the Herald on Sunday understands compensation pay-outs varied depending on the personal circumstances, with the families of most elderly passengers receiving less than $25,000.

Retired Auckland lawyer Keith Peterson, who assisted the two QCs acting for the Mt Erebus DC10 Passenger Consortium, calculates the pay-out was about $21m.

The consortium sued Air New Zealand and the Crown, representing the Civil Aviation division of the Ministry of Transport.

After more than two years, the compensation issue was settled out of court when the airline's insurers, Lloyds and AIG, "did a deal" with the Government over the compensation.

Because the passengers were not covered by Accident Compensation, the families' claims were limited to a maximum of $42,000 under the Warsaw Convention - unless they could prove reckless misconduct against the airline. In that case liability would be unlimited.

But because Civil Aviation was not bound by the Warsaw Convention, liability was also unlimited, potentially exposing the Government to a major claim.

Wellington barrister and aviation law expert Kim Murray describes the consortium's tactics at the time as "clever".

Murray, who was working as junior lawyer for the Ministry of Transport at the time of the Erebus inquiry, was aware of the settlement.

It was difficult to say if the Erebus passengers' families got a fair deal, he said. If the case had been taken in the United States the payouts would have been considerably more: "In the US life is valued very highly by juries that award damages."

In New Zealand, Murray said, families of elderly people were awarded very little. But the family of a young law student received considerably more than the average, based on future earnings.

That same year a young Auckland woman - badly burned in a Pan Am crash in 1974 - was paid several hundred thousand American dollars in damages after a US court found in her favour following a lengthy court battle.

The woman's former husband, Auckland solicitor Roger Cann, also burned in the crash, remembers struggling with his wife Heather to escape the burning Boeing 707 after it crashed in a rainstorm while landing at Pago Pago in January 1974.

Ten others got out of the plane but eight died within a week from their burns. Cann and his wife, who were on their honeymoon, were among four people who survived the crash, which killed 97.

The resulting battle for compensation, during which the Canns and the families of other passengers proved wilful misconduct on the part of Pan Am, went on for more than eight years. It was a battle that left Roger Cann "bitter and disillusioned".

Cann was a 23-year-old lawyer at the time and struggled to pay his wife's medical costs, which included extensive plastic surgery for scarring to 60 per cent of her face and body.

"Pan Am wouldn't even refund the cost of our tickets. I begged them to help with the plastic surgery costs, but they refused. It's part of a deliberate process to wear people down."

Cann himself was awarded very little compensation because by the time he stood before a jury, which was not told he had been in an air accident, the burns to his face and hands had healed.

Cann describes the system of fighting the insurance companies for compensation through court as "extremely harsh and arbitrary."

"The insurers are behind all of these cases. It is not Air New Zealand you are suing. In reality everything Air New Zealand says and does is dictated by the insurance company."

The Canns separated after the litigation was over and each remarried, although they remained friends. Heather had remained bright and outgoing in spite of her injuries, Cann said.

The "denials and attempts to avoid responsibility" were the worst aspect for victims and their families.

"I think Air New Zealand was guilty of it to a lesser extent than Pan Am.

"Air New Zealand's behaviour was not perfect and there are indications of a cover-up. That is more or less the normal behaviour of most defendants."

By comparison he admired how Air New Zealand chief executive Rob Fyfe had handled the Erebus apology and the Perpignan crash.

"I have written to him to tell him that."