A man considering a compensation bid for 10 years behind bars before his murder conviction was quashed, has died.

Dunedin man Rex Haig, 70, died peacefully in his bed yesterday, his daughter Angela Haig-McAuliffe told the Herald.

"We're very devastated. It's very sad for all of us and we're a very close family so it's going to hit all of us pretty hard."

The 42-year-old said her sister Karen, younger brother Richard and their Mum Erin Hogan - who was divorced from Haig but remained friends with him - were shattered by the news.

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A friend who lived near Haig couldn't raise him on the phone on Friday and went to the house.

The cause of Haig's death is not yet known but Haig-McAuliffe said her father had been ill with the flu recently.

Haig was convicted in November 1995 of murdering fishing crewman Mark Roderique, who was last seen on Haig's boat at Jackson Bay, South Westland the year before.

The conviction was quashed by the Court of Appeal in 2006 but not before Haig had spent 12 years trying to prove his innocence.

His first appeal was turned down in 1996 and the next year he took prison guards hostage to force a review of the conviction.

The three Court of Appeal judges heard fresh evidence from at least a dozen witnesses who pointed to Haig's nephew David Hogan as the killer.

A retrial was never ordered because if found guilty Haig would have to serve the mandatory 10 years over again.

His initial bid for compensation was turned down by former justice minister Simon Power in 2009, following a report by Robert Fisher QC that concluded Haig probably helped Hogan beat Roderique to death and threw his body overboard.

However Haig persevered, believing there were mistakes in the report and considered another bid following David Bain's payout.

Haig-McAuliffe said her father had spent the past six weeks "knee-deep in paperwork" set to relaunch a compensation claim.

"He was getting help. There was a crew and he had a lot of help. I know that he had a lot of support and it's heartening to know that."

She said the family were unsure if they would, or could, continue with the claim but would not make that decision yet.

Haig-McAuliffe said she was 19 when her father was arrested and the murder conviction took a huge toll on the whole family.

"It's been a long road for all of us but we're a very close family. Everything that we've been through has brought us very close together.

"Socially for me in my 20s and for my brother and sister it was very difficult being in the media."

Haig was semi-retired and most recently was working on an oil rig offshore from Argentina.

Haig-McAuliffe expected her father's funeral would take place later next week in Dunedin.

Haig is survived by his former wife, three children and eight grandchildren.