The man convicted of one of New Zealand's most intriguing murder puzzles has been given a new appeal.

Justice Minister Andrew Little said yesterday Scott Watson's convictions for the 1998 murders of Olivia Hope, 17, and Ben Smart, 21, will be referred to the Court of Appeal.

Watson, who turns 49 on Sunday , has maintained his innocence since his arrest and subsequent convictions, in September 1999, of killing Hope and Smart after New Year's celebrations in a Marlborough Sounds holiday hideaway.

The friends disappeared after boarding a stranger's yacht early on January 1, 1998, after marking the new year with friends at Furneaux Lodge, a century-old, boat access-only resort in Endeavour Inlet. Their bodies have never been found.

Olivia Hope was 17 when she disappeared in the early hours of January 1 1998. Scott Watson was later convicted of her murder. Photo / File
Olivia Hope was 17 when she disappeared in the early hours of January 1 1998. Scott Watson was later convicted of her murder. Photo / File
Ben Smart was 21 when he disappeared. Scott Watson was later charged with his murder. Photo / File
Ben Smart was 21 when he disappeared. Scott Watson was later charged with his murder. Photo / File

Watson was sentenced to life in prison with a minimum non-parole period of 17 years but remains behind bars after most recently being denied parole in 2016.

But Watson and his supporters - the case has long divided public opinion - have been given fresh hope after Little announced yesterday Governor-General Dame Patsy Reddy had referred Watson's convictions back to the Court of Appeal for a new hearing.

Watson's father, Chris Watson, told Newstalk ZB his son was pleased with the news of the appeal.

"We're loving it. We've just got to knuckle down and formulate this appeal.

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"We don't know at this stage whether we are confined to a narrow approach or whether we can give them a broad picture of it."

Chris Watson, the father of Scott Watson, pictured in the bar of Furneaux Lodge. File photo / Mike Scott
Chris Watson, the father of Scott Watson, pictured in the bar of Furneaux Lodge. File photo / Mike Scott

There was a new climate in which the public were thinking about the justice system and willing to look back into historic cases to ensure the right outcomes had been achieved, Watson said.

Yesterday's announcement came after Watson had made repeated legal requests for rehearings, saying the police case - that his yacht Blade was the mystery yacht the couple boarded, and that he subsequently murdered both and dumped their bodies at sea - was wrong.

His earlier appeal to the Court of Appeal in 2000 was unsuccessful, as was his subsequent application for leave to appeal to the Privy Council.

Watson then applied for a royal prerogative of mercy in November 2008.

That was assessed by Kristy McDonald QC and also ultimately declined by Governor-General Sir Jerry Mateparae in July 2013, on the advice of the then-Minister of Justice Judith Collins.

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Watson applied again in 2017.

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"The primary basis of his application was that the DNA evidence linking two hairs removed from a blanket seized from Mr Watson's boat with Ms Hope was unreliable," the Ministry of Justice said yesterday.

"The application also took issue with a number of matters in Ms McDonald's report."

Scott Watson, pictured in 2015, has always maintained his innocence. Pool photo / The Press
Scott Watson, pictured in 2015, has always maintained his innocence. Pool photo / The Press

Former High Court judge Sir Graham Panckhurst QC was told to review Watson's second application, the material considered by McDonald and her conclusions, and provide a comprehensive report.

"After thoroughly considering Sir Graham's advice and the ministry's report, I advised Her Excellency to refer Mr Watson's convictions back to the Court of Appeal for further consideration," Little said.

That advice was accepted by Dame Patsy, and Watson's application granted, meaning the case will be heard by the court as a further appeal, he said, declining further comment as the matter would soon be before the courts.

Neither Hope's parents, Jan and Gerald, nor Smart's mother, Mary, could be contacted last night. Smart's father John died in 2009.

But Mary Smart, whose Waikawa Bay home overlooked - at the time of the 20th anniversary of her son's disappearance - the moored Blade, previously described Watson as "innately evil".

"I don't think he should be let out."

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Gerald Hope previously met Scott Watson in Rolleston Prison, organised by North & South journalist Mike White. But the former Marlborough mayor thought Watson's explanations were rehearsed and insincere.

"There has been so much of our lives taken up with this and there is nothing more for us to say," Hope said in a previous interview.

"The only thing we would ever be involved with was if more evidence came to light. That'll be a long shot now."

The fate of the two couples children has intrigued - and divided - Kiwis since it emerged they had vanished from a remote and beautiful holiday spot on a celebratory summer night.

Hope and her sister Amelia had chartered the yacht Tamarack, but when the teen and Smart arrived, they discovered freeloaders had taken their beds.

Endeavour Inlet in the Marlborough Sounds is linked to one of New Zealand's most well-known double murders. File photo / Mike Scott
Endeavour Inlet in the Marlborough Sounds is linked to one of New Zealand's most well-known double murders. File photo / Mike Scott

There has long been conjecture over whether the pair then ended up on the Blade -
water taxi driver Guy Wallace would later tell police that a mystery man, unshaven and with unkempt, wavy hair, on his water taxi offered Hope and Smart a place to stay on his boat, which Wallace described as a double-masted ketch.

Questions were also raised about two blonde hairs found on a blanket on the Blade. These were matched to Hope by DNA, but questions were later raised about accidental contamination - no blonde hairs were found on the first examination of the blanket in January 1998.

A new report commissioned by the Watsons, by forensic scientist Sean Doyle, also later questioned whether the hairs even belonged to Hope.