The surgeon quickly extinguished the flames using water from the irrigation solution.
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After the operation, the family were told about the incident and no issues were raised, the report said.
Initially, it was not known whether or not the burns were full thickness burns and seven days after the operation he was discharged.
However, a week later he returned to hospital and it became obvious the burns were full thickness. He was rushed to the burns unit and a week later underwent the removal of damaged tissue, and skin grafting. The man remained in hospital for a week.
The HDC investigation found at the time of the incident, staff had a limited awareness of the risk of fire during surgery, and there was a lack of appropriate guidance in the DHB's policy in relation to fire hazards.
Hill said that the fire was a service failure directly attributable to the DHB as the service operator.
However, he also found the surgeon failed to follow the DHB's guideline regarding the use of alcohol-based solution and diathermy.
While the guideline did not discuss specific fire hazards, it did state that alcohol-based solutions must not have contact with diathermy plates.
The surgeon failed to follow the guideline by allowing the diathermy plates to make contact with the alcohol-based solution, Hill said.
As a result of the investigation, both the surgeon and the DHB were told to apologise to the man.
Hill also recommended that the surgeon undertake further education and training on fire hazards in operating theatres.
The DHB were also told to confirm the implementation and effectiveness of its new policy that forbids the supply of any alcohol-based solution to the operating team until after diathermy has been disabled.
They were also instructed to introduce a fire hazard policy, audit compliance with the Aseptic Technique Surgical Skin Preparation Clinical Guideline, and arrange training for its staff on the fire hazard policy and the guideline.
The DHB told the Herald it took full responsibility for what occurred and immediately made all recommended changes to practice, policy and training in order to ensure it will not happen again.