The government is facing a $20 million shortfall between the cost of the Rena accident and the settlement announced today.
Prime Minister John Key believed it was the best outcome possible despite the shortfall between the $47 million cost of the accident to the Crown and the $27 million compensation package.
"The liability was limited to $11.3 million so we've done a lot better than that and the legal advice we had was that if we pursued the matter through the courts it would take a long time and cost a lot of money and not necessarily be very successful."
He said that compensation could rise to $37 million if the Rena was left on the reef, an option opposed by local Maori but favoured by some locals because it would attract marine life and become a diving site.
"But if they can leave it as a wreck and a diving site, it will be below the water and saves $10 million in removal costs, which would be paid to the Crown."
Maritime New Zealand media advisor Michael Flyger said the court case would still be going ahead despite the settlement and is expected to resume on October 26.
"They are quite different processes so the court case is still procceding. The settlement is for costs incurred so far. The court case is for charges brought against the operator," he said.