There had been reports they had attacked another group of youths - even attempting to run them over - and damaged property at a cafe on Tamaki Drive, Mission Bay.
In responding to the reports, police tracked the car down and signalled the driver to stop.
But the female driver accelerated and shortly after hit a concrete island while attempting to overtake another car.
The driver and her occupants crashed into a concrete block wall, with all four sustaining serious injuries.
"This was a pursuit which lasted 53 seconds and covered approximately 1.4km prior to the crash," IPCA chairman Judge Sir David Carruthers said.
"Police complied with the law and policy throughout the pursuit and the communication, especially in relation to risk, was excellent."
The Authority found that the main factors causing the crash were the driver's excess speed and blood alcohol level.
Similar findings were made in the Taupo incident, which resulted in the death of 20-year-old Callan Moss.
In the early hours of March 16, the suspended restricted driver who had been drinking, fled police after being signalled to stop due to speeding.
He sped off and while trying to overtake a truck, he clipped its rear, causing his car to spin across the road into the path of an oncoming vehicle.
Moss was killed at the scene, while a passenger, Shayde Sharp, received serious injuries. A second passenger, Shane Petersen, was uninjured
The Authority concluded that there were no breaches of policy or neglect of duty.
The actions of the officer who started the short pursuit were "reasonable and justified", while no police act or omission was "unlawful, unreasonable, unjustified, unfair, or undesirable".
Sir David said it was a tragic accident caused by the actions of Moss.
"While in these instances the Authority has not found any breaches of police policy, the Authority is continuing its discussions with police about a review of policies connected with the pursuit of fleeing drivers," Sir David said.
"This is due to the conflict between the often prescriptive nature of the relevant polices and the reality of a fast-paced, time-pressured situation."