Corrections will seek legal advice on whether there should be compensation for inmates whose release dates were wrongly calculated, Prime Minister John Key says.
It follows a Supreme Court ruling last week which found the department had wrongly calculated the release dates of two inmates.
On Friday, 21 prisoners walked free and more are expected to follow in the wake of the court's ruling.
Mr Key said the final in a succession of court cases had gone against the department and there was no other legal avenue.
"This last [court case] went against us and there is no other legal place to go"- John Key
"So as I understand it they're now going to have to go away and get advice from Crown Law and others to see whether technically should there be compensation if there technically was, should it be paid, how would you do it, what are the options available, so it'll take a little longer than today to get an answer to that."
Corrections Minister Judith Collins was to brief Cabinet colleagues today but Mr Key told Morning Report she had 'flu so it was unclear if that would go ahead.
The Salvation Army helped six of the 21 prisoners on their release. National director for reintegration services Lynette Hudson it was contracted by the Department of Corrections but the decision took it by surprise and finding homes usually takes weeks.
"The accommodation units are in various places around the country, and we do have a long waiting list of people to get into these services and so normally the process takes a lot longer, but we always want to respond to a situation where there's a bit of a crisis really."
Ms Collins has said Corrections would rigorously defend any compensation claims made by those prisoners.
"There is a court higher than the Supreme Court and that is Parliament and I think that Parliament has clearly, in 2002, produced a law that was clearly subject to interpretation and different interpretations.
"The fact that the law at the time of those 14 years was what the Court of Appeal had interpreted it as, I think Corrections is in a much better position than some might think and certainly that is the legal advice that's been made available to me," she said.
Hawke's Bay barrister Jonathan Krebs said not withstanding the earlier Court of Appeal decisions, the Supreme Court had now given a definitive ruling.
"The way in which our unwritten constitution works in New Zealand is that Parliament makes the law, the executive administers the law and the courts interpret the law.
"The highest court in our country is the Supreme Court and the Supreme Court has interpreted the law last week as meaning a particular thing, by definition that means that the law has always been as the Supreme Court has interpreted," he said.
Law Society criminal convenor Stephen Bonnar QC said while the earlier rulings may allow Corrections to argue it didn't act in bad faith, it may still be liable for paying compensation.
He said the most recent example of a major compensation claim was Teina Pora, who received just $2.5 million for his wrongful conviction and imprisonment for nearly 22 years.
But he was aware of cases involving relatively short periods of wrongful detention which had resulted in people being paid tens of thousands of dollars in compensation.
"I can think of one case off the top of my head, which is a few years ago now, where I think someone may have spent say three or four days wrongfully detained by the police and I think they may have received about $10,000," Mr Bonnar said.
He said while Parliament could pass retrospective legislation, there was a reluctance to do that.
"There's a general reluctance, or repugnance even, to impose retrospective laws on people, the basic legal principle is that people are entitled to act and entitled to know what the law is at a particular time and when you make retrospective laws, of course, you're changing everything after the event."