The March 11 crash claimed the lives of Johnathan Tairakena, Phillip Stretch and innocent motorist Carmen Marie Yanko.
Yanko, 53, had been travelling to a Sunday market, where she operated a stall, when she was caught up in the crash. Her family called her death a "senseless tragedy".
The Holden driven by Tairakena had led police on a 6km pursuit before overtaking a truck on State Highway 6 and crashing into Yanko's car.
All three died on impact following a pursuit that lasted less than three minutes.
An officer responding to the crash went to help an unresponsive Yanko first, however, she could not be removed from the vehicle to attempt CPR.
He then went to the Holden and saw its occupants were also appeared deceased.
The officer was able to identify the passenger Stretch, and although he did not recognise Tairakena, he could see that he was not Popata.
Authority chairman Judge Colin Doherty said the pursuit was "properly commenced and conducted safely" in accordance with police policy and the law.
The IPCA ruled the decision by police staff to try stop the fleeing Holden was reasonable and the resulting pursuit was justified.
"The collision scene was managed safely," Doherty said.
Tasman District Commander Superintendent Mike Johnson said the death of three people including an innocent road user was a tragedy.
Police had been looking to stop the fleeing car as it was believed a high-risk wanted offender was in the car, Johnson said.
"We offer our condolences to the friends and whānau of all those killed in the crash."
Police staff go to work every day to keep the community safe, this is the worst possible outcome for our staff, he said.
"This was a needless waste of three lives which could have been avoided had the driver just stopped when signalled to do so by police," Johnson said.
Fleeing driver events can be volatile, unpredictable and high-risk to everyone involved, he said.
These events are not commenced lightly by police and staff are trained regularly in dynamic risk assessment (Threat-Exposure-Necessity-Response) for situations such as this.
"The one thing we want everybody to understand, is if they're signalled to stop by police, they should pull over and stop," Johnson said.
Read more from The Chase:
• To pursue or not to pursue, that is the question for police
• Mother speaks after fatal pursuit - 'we visit her grave every day'
• Fatal pursuit cop warned driver of 'killing your mates' 48 hours before crash
• Wannabe heroes - why drivers flee police
• Fleeing driver - 'I knew if I drove erratically they would stop chasing me'
• Woman convicted after pursuit 'don't judge me'
