His Hyundai team later confirmed he would withdraw from the rally.
Today, Paddon posted a statement reflecting on yesterday's events.
"Firstly, our thoughts are with the family and friends of the spectator involved," said Paddon. "No matter the circumstances, this is never something we want to see.
"Secondly, John and I are humbled by all the messages of support at this time. Obviously, my thoughts are with the family and that is my only concern at the moment. Not being able to return home to New Zealand does make it a little tougher but it is important we stay strong.
"I do want to take this chance to ask people not to speculate. Irrespective of how and why the accident happened, finger pointing will not change anything. The most important is that we learn from this and I am committed to work with the FIA and rally organisers relentlessly to ensure this does not happen again."
Paddon and navigator John Kennard were attempting a left-hand bend when they slid off the road and hit a bank, flipping the car on its side.
A man, believed to be a photographer, could then be seen in video footage tumbling down on to the road near the car.
It is unclear if the car directly struck the man or if Paddon's collision caused him to fall from a perch on the embankment.
Paddon and Kennard were not hurt and safely exited the vehicle. But Paddon could be seen wildly gesticulating to spectators who approached the crash.
"I will take this chance to ask spectators at rallies to please be considerate where you stand and to respect the instructions of the marshals," said Paddon. "We all want to enjoy a good show and go home to the family afterwards. I also ask each and every rally fan at the events, if you see someone in a dangerous position to request they move for everyone's best interest. As a community, we can collectively work together to prevent this from happening again."
Rally Monte Carlo director Christian Tornatore confirmed in a statement that emergency services were called to rescue the man, who was unconscious.
He was airlifted to a hospital in Nice but died soon after.
Hyundai Motorsport said in a statement they were deeply saddened by the man's death and sent their condolences to his family.
The first stage was also cancelled as a result of the accident.
"The team and crew have pledged their full support to the event organisers and authorities to understand the full details," Hyundai said.
Paddon and Kennard went off-road near the end of the 21.25km route, which in recent days has been plagued by frost, black ice and sub-zero temperatures.
The stage was the first of the new WRC season and the first since more powerful cars were introduced to the championship over the off-season.
Rally stars Sebastien Ogier and Thierry Neuville had earlier completed the stage without incident.
In an interview with the Herald late last week, Paddon said the new, more powerful car for the 2017 season might just take a bit of getting used to and could be a handful in the traditionally cold and treacherous conditions of Rally Monte Carlo.
"We basically had two months with no driving [rallying] until last week when we had a test," said Paddon from Monte Carlo. "This is probably the most difficult rally of the year and it's a bit like being thrown in at the deep end.
"This is not your normal tarmac rally, either. I think of the whole rally you could say 30 per cent is like a normal tarmac rally. The rest of it is trying to judge your speed and at times you're down to walking pace on some corners because of the ice.
"The new car is a bit different to last year's. You don't really notice it in the slow speed sections, but as soon as you start getting a bit of speed up, and especially at high speed, you can feel the extra horsepower.
"The corners come a bit quicker at you and with the aero and electronic diffs you can carry much more speed through the corner. It takes a bit of adjusting to try and get to know what the car is capable of doing.
"We're still learning what the car can do and it should suit my driving style [on his favoured gravel rather than tarmac, which Rally Monte Carlo is raced on].
"My driving style isn't as smooth as some of the other drivers so the extra power on gravel should suit me more."
This year Paddon's goal at the opening event was to get through the event with a straight car and as many points as possible and then look to the rest of season for race wins.
Things didn't go according to plan.
Round two of the WRC is in Sweden from February 9-12.
Hayden Paddon's full statement:
Hi everyone,
Upon reflection, I wanted to issue a small statement about yesterday events.
Firstly, our thoughts are with the family and friends of the spectator involved. No matter the circumstances, this is never something we want to see.
Secondly, John and I are humbled by all the messages of support at this time. Obviously, my thoughts are with the family and that is my only concern at the moment. Not being able to return home to New Zealand does make it a little tougher but it is important we stay strong.
I do want to take this chance to ask people not to speculate. Irrespective of how and why the accident happened, finger pointing will not change anything. The most important is that we learn from this and I am committed to work with the FIA and rally organisers relentlessly to ensure this does not happen again.
I will take this chance to ask spectators at rallies to please be considerate where you stand and to respect the instructions of the marshals. We all want to enjoy a good show and go home to the family afterwards. I also ask each and every rally fan at the events, if you see someone in a dangerous position to request they move for everyone's best interest. As a community, we can collectively work together to prevent this from happening again.
Lastly, I please ask the respect from the media in these times, especially for the family and friends of the spectator. I will not issue any further statements or conduct interviews at this stage. We made the decision to not continue this weekend out of respect, but will be back in Sweden where we will pay tribute.
Thank you again for everyone's support and for the support of the team - it really does mean a lot.
Until Rally Sweden,
Hayden
