They were concerned the man who was refusing to come out might have firearms and be trying to escape.
A physical altercation inside was deemed justified, but unlawful given they had no right to enter the property,
The Independent Police Conduct Authority said to enter without a warrant, police must believe the person might destroy, conceal, alter or damage evidence or be be likely to escape.
It said in these cases police wrongly interpreted their power and substantially overreached it illegally.
Police have acknowledged the IPCA's findings into the Dunedin incident.
"Police are working to issue a practice note nationally for staff to ensure the legal requirements for entering private property without a warrant are understood."