When in 1876 Butler quitted Australia for New Zealand, he was sufficiently accomplished to obtain employment as a schoolmaster.

At Cromwell, Otago, under the name of "C. J. Donelly, Esq.," Butler opened a "Commercial and Preparatory Academy," and in a prospectus that recalls Mr. Squeers' famous advertisement of Dotheboys Hall, announced that the programme of the Academy would include "reading, taught as an art and upon the most approved principles of elocution, writing, arithmetic, euclid, algebra, mensuration, trigonometry, book-keeping, geography, grammar, spelling and dictation, composition, logic and debate, French, Latin, shorthand, history, music, and general lectures on astronomy, natural philosophy, geology, and other subjects." The simpler principles of these branches of learning were to be "rendered intelligible, and a firm foundation laid for the acquirement of future knowledge." Unfortunately a suspicion of theft on Butler's part cut short the fulfilment of this really splendid programme, and Butler left Cromwell hurriedly for the ampler field of Dunedin. There, less than a fortnight after his arrivel{sic}, he was sentenced to four years' hard labour for several burglaries committed in and about that city.

On the 18th of February, 1880, Butler was released from prison. With that consummate hypocrisy which was part of the man, he had contrived to enlist the sympathies of the Governor of the Dunedin Jail, who gave him, on his departure, a suit of clothes and a small sum of money. A detective of the name of Bain tried to find him employment. Butler wished to adopt a literary career. He acted as a reporter on the Dunedin Evening Star, and gave satisfaction to the editor of that newspaper. An attempt to do some original work, in the shape of "Prison Sketches," for another newspaper, was less successful. Bain had arranged for the publication of the articles in the Sunday Advertiser, but when the time came to deliver his manuscript, Butler failed to appear. Bain, whose duty it was to keep an eye on Butler, found him in the street looking wild and haggard. He said that he had found the work "too much for his head," that he had torn up what he had written, that he had nowhere to go, and had been to the end of the jetty with the intention of drowning himself. Bain replied somewhat caustically that he thought it a pity he had not done so, as nothing would have given him greater joy than going to the end of the jetty and identifying his body. "You speak very plainly," said Butler. "Yes, and what is more, I mean what I say," replied Bain. Butler justified Bain's candour by saying that if he broke out again, he would be worse than the most savage tiger ever let loose on the community. As a means of obviating such an outbreak, Butler suggested that, intellectual employment having failed, some form of manual labour should be found him. Bain complied with Butler's request, and got him a job at levelling reclaimed ground in the neighbourhood of Dunedin. On Wednesday, March 10, Butler started work, but after three hours of it relinquished the effort. Bain saw Butler again in Dunedin on the evening of Saturday, March 13, and made an appointment to meet him at half-past eight that night. Butler did not keep the appointment. Bain searched the town for him, but he was nowhere to be found.

About the same time Butler had some talk with another member of the Dunedin police force, Inspector Mallard. They discussed the crimes of Charles Peace and other notable artists of that kind. Butler remarked to Mallard how easy it would be to destroy all traces of a murder by fire, and asked the inspector whether if he woke up one morning to find some brutal murder had been committed, he would not put it down to him. "No, Butler," replied the inspector, "the first thing I should do would be to look for suspicious circumstances, and most undoubtedly, if they pointed to you, you would be looked after."

In the early morning of this Saturday, March 13, the house of a Mr. Stamper, a solicitor of Dunedin, had been broken into, and some articles of value, among them a pair of opera glasses, stolen. The house had been set on fire, and burned to the ground. On the morning of the following day, Sunday, the 14th, Dunedin was horrified by the discovery of a far more terrible crime, tigerish certainly in its apparent ferocity. In a house in Cumberland Street, a young married couple and their little baby were cruelly murdered and un{sic}{an??} unsuccessful attempt made to fire the scene of the crime.

About half-past six on Sunday morning a man of the name of Robb, a carpenter, on getting out of bed, noticed smoke coming from the house of a neighbor of his, Mr. J. M. Dewar, who occupied a small one-floored cottage standing by itself in Cumberland Street, a large and broad thoroughfare on the outskirts of the town. Dewar was a butcher by trade, a young man, some eighteen months married, and father of a baby girl. Robb, on seeing smoke coming from Dewar's house, woke his son, who was a member of the fire brigade. The latter got up, crossed the street, and going round to the back door, which he found wide open, entered the house. As he went along the passage that separated the two front rooms, a bedroom and sitting-room, he called to the inmates to get up. He received no answer, but as he neared the bedroom he heard a "gurgling" sound. Crawling on his hands and knees he reached the bedroom door, and two feet inside it his right hand touched something. It was the body of a woman; she was still alive, but in a dying condition. Robb dragged her across the passage into the sitting-room. He got some water, and extinguished the fire in the bedroom. On the bed lay the body of Dewar. To all appearances he had been killed in his sleep. By his side was the body of the baby, suffocated by the smoke. Near the bed was an axe belonging to Dewar, stained with blood. It was with this weapon, apparently, that Mr. and Mrs. Dewar had been attacked. Under the bed was a candlestick belonging also to the Dewars, which had been used by the murderer in setting fire to the bed. The front window of the sitting-room was open, there were marks of boot nails on the sill, and on the grass in front of the window a knife was found. An attempt had been made to ransack a chest of drawers in the bedroom, but some articles of jewellery lying in one of the drawers, and a ring on the dressing-table had been left untouched. As far as was known, Mr. and Mrs. Dewar were a perfectly happy and united couple. Dewar had been last seen alive about ten o'clock on the Saturday night getting off a car near his home. At eleven a neighbour had noticed a light in the Dewars' house. About five o'clock on the Sunday morning another neighbour had been aroused from his sleep by the sound as of something falling heavily. It was a wild and boisterous night. Thinking the noise might be the slamming of his stable door, he got up and went out to see that it was secure. He then noticed that a light was burning in the bedroom window of the Dewars' cottage.

Nothing more was known of what had occurred that morning until at half-past six Robb saw the smoke coming from Dewars' house. Mrs. Dewar, who alone could have told something, never recovered consciousness and died on the day following the crime. Three considerable wounds sufficient to cause death had been inflicted on the unfortunate woman's head, and five of a similar character on that of her husband. At the head of the bed, which stood in the corner of the room, there was a large smear of blood on the wall just above the door; there were spots of blood all over the top of the bed, and some smaller ones that had to all appearances spurted on to the panel of the door nearest to the bed.

The investigation of this shocking crime was placed in the hands of Detective Bain, whose duty it had been to keep an eye on Robert Butler, but he did not at first associate his interesting charge with the commission of the murder. About half-past six on Sunday evening Bain happened to go to a place called the Scotia Hotel, where the landlord informed him that one of his servants, a girl named Sarah Gillespie, was very anxious to see him. Her story was this: On the morning of Thursday, March 11, Robert Butler had come to the hotel; he was wearing a dark lavender check suit and carried a top coat and parcel. Butler had stayed in the hotel all Thursday and slept there that night. He had not slept in the hotel on the Friday night, and Sarah Gillespie had not seen him again until he came into the house about five and twenty minutes to seven on Sunday morning. The girl noticed that he was pale and excited, seemed afraid and worried, as if someone were coming after him. After giving her some money for the landlord, he went upstairs, fetched his top coat, a muffler, and his parcel. Before leaving he said he would have a pint of beer, as he had not breakfasted. He then left, presumably to catch an early train.

Butler was next seen a few minutes later at a shop near the hotel, where he bought five tins of salmon, and about the same time a milk-boy saw him standing on the kerb in Cumberland Street in a stooping position, his head turned in the direction of Dewars' house. A little after ten the same night Butler entered a hotel at a place called Blueskin, some twelve miles distant from Dunedin. He was wearing an overcoat and a light muffler. He sat down at a table in the dining-room and seemed weary and sleepy. Someone standing at the bar said "What a shocking murder that was in Cumberland Street!" Butler started up, looked steadily from one to the other of the two men who happened to be in the room, then sat down again and, taking up a book, appeared to be reading. More than once he put down the book and kept shifting uneasily in his chair. After having some supper he got up, paid his reckoning, and left the hotel.

At half-past three the following morning, about fifteen miles from Dunedin, on the road to Waikouaiti, two constables met a man whom they recognised as Butler from a description that had been circulated by the police. The constables arrested and searched him. They found on him a pair of opera glasses, the property of Mr. Stamper, whose house had been burgled and burned down on the morning of the 13th. Of this crime Butler acknowledged himself to be the perpetrator. Besides the opera glasses the constables took from Butler two tins of salmon, a purse containing four shillings and sixpence, a pocket knife, a box of matches, a piece of candle, and a revolver and cartridges. The prisoner was carrying a top coat, and was dressed in a dark coat and grey trousers, underneath which he was wearing a white shirt, an under flannel and a Rob Roy Crimean shirt. One of the constables noticed that there were marks of blood on his shirt. Another singular feature in Butler's attire was the fact that the outer soles of his boots had been recently removed. When last seen in Dunedin Butler had been wearing a moustache; he was now clean shaven.