A legal letter from the Acting Solicitor-General contradicts political parties' claims that they had approval for taxpayer-funded election spending.
Since the row began, Labour, New Zealand First and Act have said the Parliamentary Service - which runs Parliament - approved the payments.
New Zealand First and Act say they sought prior approval from the Parliamentary Service for their taxpayer-funded election spending.
And Labour leader and Prime Minister Helen Clark says the issue is essentially a dispute between the Parliamentary Service and the Auditor General.
But a letter from Acting Solicitor General Cheryl Gwyn says the Parliamentary Service's job is to administer payments.
It has no decision-making power and is not able to vet spending before the money is paid.
The letter, dated July 27, was written to Auckland barrister Alan Dormer.
He is acting for Libertarianz Party leader Bernard Darnton, who is seeking a judicial review of the spending on Labour's election pledge card, which cost $446,000.
The legal action is not part of the Auditor-General's inquiry into what taxpayers paid for political advertising in the three months before the election, but there are some common points of interest.
Depending on the timing of the case, it has the potential to complicate the Auditor-General's finding.
Labour's statement of defence was filed this week.
It says reviewing a political party's operations of its leader's office and/or matters occurring in the conduct of the business of Parliament is a job for Parliament, not the courts.
Cheryl Gwyn's letter says the Parliamentary Service has no "statutory power of decision".
"The Parliamentary Service only administers [her emphasis] the payment of funding entitlements for parliamentary purposes, in accordance with the Speaker's directions.
"The process for payment of invoices by the Parliamentary Service is that members and parties present invoices for payment once the expense has been incurred.
"Prior approval from the Parliamentary Service is not sought, and there is no opportunity for the Parliamentary Service to vet spending at any stage prior to payment."
Attorney-General and Deputy Prime Minister Michael Cullen would not comment on what he called the mechanics of the approval process because he had not been involved.
A spokesman for New Zealand First leader Winston Peters said the letter did not contradict Mr Peters' statement that New Zealand First sought prior approval.
He interpreted the letter as meaning the Parliamentary Service did not seek copies of literature, which did not preclude parties offering it material to vet.
Parliamentary Service general manager Joel George would not comment.
"It is not my place to be debating in the media what the members are saying, and given that the Solicitor-General is doing stuff on our behalf, it is probably not my place to be commenting to the media on that either," he said.
He had collected MPs' responses to the Auditor-General's provisional findings of illegal spending and would respond to the Auditor-General next week.
Labour's statement of defence says the pledge card was "an inherently political expression".
This is a different emphasis to that put on the card by Helen Clark, who said it was allowable under election spending rules because it set out the party's policy.
The statement of defence also says that under the Bill of Rights, the Labour Party and its leader have "the unqualified right to freedom of thought, conscience, religion, and belief, including the right to adopt and to hold opinions without interference".
Mr Dormer said Labour appeared to be saying that it had a right to exercise freedom of speech at the taxpayers' expense.
"If one put all their quotes together, there would be a high degree of inconsistency, it seems to me."
The Labour Party is being taken to court for spending $446,000 of taxpayers' money on its pledge card for last year's election.
Its opponents have a legal letter from the Acting Solicitor-General saying officials of the Parliamentary Service had no authority to approve the spending.
The letter contradicts claims by Labour and other parties that the Parliamentary Service approved the payments.