A botched Treaty settlement negotiation pitted rival Wellington iwi against one another, causing prejudice and further grievances, the Waitangi Tribunal has found.

In a landmark finding, the tribunal has criticised Crown negotiators, accusing them of breaching Treaty principles, breaking promises and failing to act in good faith.

In a 113-page report issued yesterday, the tribunal upheld in part a claim by Port Nicholson Block Settlement Trust that it had been misled and deceived by Crown negotiators.

Trust chairman Sir Ngatata Love, on behalf of 14,000 Taranaki Whanui claimants, alleged Crown negotiators had promised not to offer any commercial properties in the Port Nicholson Block to rival iwi Ngati Toa if the trust agreed to give up the Wellington central police station site, worth between $30 million and $41m.

The trusttook legal action this year after it emerged Ngati Toa stood to gain other commercial properties in the trust's patch, contrary to the apparent deal.

In its findings, the tribunal agreed the Crown had breached an undertaking to the trust relating to downtown Wellington, but dismissed the trust's claim to exclusivity in the wider block area.

"The Crown gave Taranaki Whanui an undertaking that, in exchange for agreeing to the release of the police station from their settlement package, no other property would be offered to Ngati Toa in the Wellington CBD as commercial or cultural redress," presiding tribunal officer Judge Stephen Clark said.

"Furthermore . . . the Crown broke that undertaking and, in so acting, breached Treaty principles."

In a letter to Maori Affairs Minister Pita Sharples and Treaty Negotiations Minister Chris Finlayson, Judge Clark urges the Government to review its offer to Ngati Toa of right of first refusal over Crown properties in central Wellington, to honour its original undertaking to the trust.

If, by implementing the tribunal's recommendation, Ngati Toa were commercially disadvantaged, the Crown should offer alternative commercial redress.

The report also highlights flaws in Crown negotiation processes, which led to confusion and created new grievances among the rival iwi.

"The Crown did itself no favours in breaking the undertaking, thereby straining already sensitive tribal relationships. The burden on both Maori and Pakeha of the great wrongs . . . in the past will not be lifted if the process of settling creates new wrongs.”

Ngati Toa chief negotiator Matiu Rei said his iwi accepted the tribunal's findings. "Notably the tribunal has again reconfirmed that Taranaki Whanui don't have exclusive mana whenua in the Port Nicholson Block.

"Ngati Toa have always maintained the position that the Treaty settlement process should be between the Crown and iwi, and not iwi against iwi, which has become apparent in this case."

Sir Ngatata said the tribunal's report was vindication, despite its dismissal of the trust's main claim.

“The tribunal ‘strongly sympathised' with our frustrations and what led us to seeking their intervention.”

The trust was taking legal advice on whether to challenge aspects of the tribunal's findings, he said.

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