Pike River families are celebrating their victory, after the Supreme Court ruled the decision to not lay charges against Peter Whittall was unlawful.

In the aftermath of the Pike River disaster, where 29 people lost their lives, WorkSafe put together a case that would have brought 12 charges against former mine boss Whittall.

But the case was dropped after he agreed to pay $3.41 million to the families.

Today the Supreme Court ruled that was unlawful, and effectively a payment to avoid prosecution.

It overturns previous decisions from the High Court and Court of Appeal.

Sonya Rockhouse, who lost her son Ben in the disaster, said the ruling was so exciting she could barely believe it.

"This is the fourth court we've been to, so I'm just ecstatic, I'm bursting. I'm so excited I can't even think.

"This will show him [Whittall] that we just didn't take what he'd done lying down. We weren't going to give up.

"It's a pity we couldn't bring him back [to face charges], but we can't, so we'll take this.

"This shows you cannot pay to get out of charges, so chequebook justice doesn't work now.

"This will set a precedent now, and lawyers will have to think twice before they make this sort of deal in the future.

"If nothing else, it will stop other people going through what we've had to go through."

Despite today's decision, fresh charges will not be laid against Whittall because too much time has passed.

However, the Supreme Court decision was clear that the charges shouldn't have been dropped.

"The court has found that the arrangement to offer no evidence was in exchange for the payment and constituted an arrangement to stifle prosecution.

"It was irrelevant that WorkSafe considered other factors in reaching the decision to offer no evidence.

"The payment was in exchange for the withdrawal of the prosecution and was unlawful."

The Supreme Court's decision was unanimous, and said WorkSafe's decision had gone against the public interest.

The court justices noted that both sides accepted that the passage of time meant that trying to lay charges now would not be appropriate.

Nigel Hampton QC, who took the case for Sonya Rockhouse and Anna Osborne, said there was never any point fighting for charges to be laid again.

"The reality is that seven years have gone by, and we didn't seek to get WorkSafe to resume the prosecution.

"What we wanted was a clear decision that principle still wins over pragmatic payment of money."

He said today's decision prompted tears of joy from the Pike River families.

"Here we are, seven years on since the explosion. And in one week they got the keys to the gate so that they can proceed with the recovery to the drift of the mine itself.

"Then four days later we get a decision saying that WorkSafe were wrong in doing what they did.

"It's a very important decision on principle.

"That principle is that criminal justice cannot be bought here in New Zealand, that we have a principled system of criminal justice, that a bargain to stifle a prosecution by paying money always was unlawful and remains unlawful in New Zealand."

WorkSafe released a brief statement from their chief legal adviser Michael Hargreaves, which said they accepted the court decision.

"We are currently considering the decision and will make comment later today."