Mr Brown and Mr and Mrs Lewis, from Adelaide, would still be alive today had other pilots been warned of the problem, he said.
It would happen again unless pilots were warned, as the Airways report indicated, that this was happening to half of all planes heading into Taupo using an Aircraft Direction Finder (ADF).
ADF is used by pilots because there are no air traffic controllers at Taupo Airport to direct them.
The equipment could give false readings depending on the weather at the time, the inquest was told.
Mr Grace said it was "extraordinary" no one had passed on information to the CAA to warn other pilots of the problem.
The issue had been filed away once it was realised the problem could be resolved once GPS was introduced for flying into Taupo, he said.
Mr Brown's plane had GPS fitted but he wasn't certified to use it.
"It was filed in the too-hard basket ... They decided to do nothing about it," he said. "It just beggars belief this has happened ... Every second plane flying into Taupo could crash into Mt Tauhara."
Within a month of the deaths, Air New Zealand stopped flying into Taupo, Mr Grace told the inquest.
"The general public were told nothing," he said. "[Air New Zealand] kept it to themselves ... Airways has known this has been an ongoing problem for about 10 years."
Mr Lewis' son, Mark Lewis, who has been an RAF pilot and is a private pilot, made a number of submissions to the inquest about the same issue, as well as about Mr Brown's health.
He, his sister and uncle flew to New Zealand for the inquest to find "clarity".
A post-mortem examination found Mr Brown had disease around a replaced heart valve and 14g of carboxy-tetrahydrocannabinol in his blood - showing he had possibly had cannabis in the 48 hours before his death.
Mr Lewis also claimed baggage wasn't secured in the plane - which breached aviation rules.
Mr Brown's family have denied he ever used drugs, saying he was anti-drugs.
Mr Lewis said the culture around medical testing for pilots needed to upgraded and regulations needed to be brought up to world standards.
Outside New Zealand, pilots with heart problems were not able to fly alone, the inquest was told.
Safety needed to be paramount, Mr Lewis said.
"It's disappointing we have an environment in New Zealand that is like this ..." he said.
His family were gutted by the deaths of their "precious" family members.
Coroner Wallace Bain adjourned the inquest to get more information regarding Mr Brown's medical condition. "It's a complicated case," he said.