Erin Walsh, with his lawyer Sean MacDonald, arrives at the New Brunswick Court of Appeal in Fredericton in March 2008. (Andrew Vaughan/Canadian Press)

The New Brunswick government has reached an out-of-court settlement with Erin Michael Walsh over his wrongful conviction for second-degree murder in 1975.

In a release from the Office of the Attorney General on Friday afternoon, Justice Minister Michael Murphy announced the settlement without disclosing financial details.

Walsh, who was convicted of murdering Melvin (Chi Chi) Peters in Saint John in August 1975, had filed a lawsuit seeking $50 million in compensation for the wrongful conviction.

"The province acknowledges and agrees ... that a miscarriage of justice may have occurred respecting the 1975 conviction because of the timeliness, processes and procedures of the day. The province and the city have therefore agreed to pay compensation to Mr. Walsh and his wife," the statement said.

"The parties are pleased that this matter has been concluded to the satisfaction of all involved. The details of the settlement are subject to a confidentiality agreement among the parties to the civil action and their respective legal counsel."

Under the Survivor of Actions Act in New Brunswick, if Walsh had died during the delays in his civil case, any financial settlement could have been severely reduced.

The law states if a person dies, the only damages that can be awarded are for an actual loss to the person or their estate, and cannot include payments for "loss of expectation of life, pain and suffering."

Walsh's five-week civil action was supposed to start on Tuesday but was rescheduled for Oct. 26 because one of his lawyers had a death in the family.

Walsh's 1975 conviction was overturned by the New Brunswick Court of Appeal in 2008. He was suing the province, the Saint John city police and William McCarroll, a sitting judge who was the Crown prosecutor at the time, for compensation.

Now dying of cancer

Walsh, who now lives in Kingston, Ont., and is dying of colon cancer, argued he was deprived of a fair trial because key pieces of evidence were not disclosed that would have exonerated him at his original trial.

The evidence, obtained by Walsh as part of a 2005 access-to-information request, included a report of jailhouse conversations that suggested someone else shot Peters.

"In March 2008 ... the New Brunswick Court of Appeal accepted various documents as fresh evidence. Mr. Walsh now acknowledges and agrees that these documents did not meet the test of admissibility before the Court of Appeal and should not have formed a basis for that court's findings," Murphy states.

"The parties to the civil action now acknowledge and agree that in fact all relevant documents were available to Mr. Walsh and his defence counsel and that Mr. McCarroll and the police, respectively, acted at all times in good faith and in accordance with the law and fully complied with all of their obligations to Mr. Walsh and to the public in the investigation and prosecution and are therefore completely absolved of all allegations of any wrongdoing."

At the time of Peters's death, Walsh, who has a long criminal record, was travelling from Toronto. He arrived in Saint John and met up with a group that included Peters for drinks at a beach in the city's south end.

When leaving the area, a fight broke out in a car, a shotgun went off and Peters was killed.

Walsh was convicted by a jury in less than one hour and sentenced to life in prison with no possibility of parole for 10 years. The conviction was upheld on appeal in 1982.

In 2006, Walsh filed an application to the court, arguing that his conviction resulted from a miscarriage of justice.

He began a civil action against the province, former Crown prosecutor William McCarroll, the City of Saint John and various chiefs of the Saint John police force in July 2007.