The conditions are believed to have prompted the resignation of four of the Tuhoronuku board members after the meeting, claiming the board had refused to sign up to all of Maranga Mai's recommendations.
They were Moana Tuwhare, Sam Napia, Sheryl Turner and Helene Leaf. Two more are understood to be considering resigning.
Tuwhare, one of Tuhoronuku's representatives involved with Maranga Mai, told Radio NZ the process had been a waste of time for all concerned.
The ructions will cause Finlayson concern but Sadler said yesterday he believed Tuhoronuku had met all of Finlayson's demands and he had no reason not to accept Tuhoronuku's ongoing role.
He said the four who resigned had protested over the board's wishes for urban, kuia and kaumatua representation in the new model.
However, one source said the board's letter was brinkmanship from Tuhoronuku to stop Finlayson removing the mandate and to give them ballast to take legal action if Finlayson did take that step.
A spokeswoman for Finlayson said he had been advised of the decisions made by Tuhoronuku and would discuss it with Cabinet but would not comment further.
The Crown has spent $4 million in attempts to settle the issue of the mandate to negotiate for Ngapuhi, a process that has taken seven years and counting.
Finlayson's goal is to resolve the commercial redress of any settlement by August 2017 and cultural and historical redress over a longer period.
However, the impasse over the mandate had prompted him to tell Ngapuhi he would have to delay their settlement and bring other iwi forward in 2017 if they could not agree.
The Maranga Mai report was the result of negotiations between the Crown, Tuhoronuku, and a rival group of hapu - Te Kotahitanga.
It was set up after the Waitangi Tribunal found broader hapu buy-in was needed for Tuhoronuku's mandate, which was recognised by the Crown in 2011.
There was a last-minute flurry of correspondence between Sadler and Finlayson, including over Sadler's' concerns Maranga Mai would result in a fractured settlement by hapu rather than a unified Ngapuhi settlement.
Finlayson wrote to Sadler on Thursday to reassure him the Maranga Mai report still proposed a unified approach.
Finlayson had also raised concern about a report Tuwhare, who represents Waimate hapu, had resigned.
Sadler warned him off interfering, saying other hapu were available to take the position and given the "litigious" nature of things, the Crown should not interfere.
