• There is insufficient information to conclude if property was damaged.
The gunfight occurred when the SAS visited the village of Khor in June 2004 on a patrol intended to "gather information about the mood of the population and establish whether there were security issues in the region" ahead of elections due later that year.
The inquiry has found that statements made to NZ media by two Afghan villagers that the troops "kicked, slapped and punched us" and used abusive language were incorrect.
"Members of the patrol left their vehicles and talked quite amicably through an interpreter with locals in the bazaar - local villagers and shop keepers - and patrol members even went on to buy bread from the market," the Defence Force said.
It said the patrol was attacked in their camp about 2km outside the village that night and were taken by surprise.
"When the attack commenced in the small hours of June 18, the majority of NZSAS patrol members were asleep around their vehicles," it said.
It said two SAS soldiers were wounded and were evacuated by Coalition helicopters.
The SAS patrol then conducted a "cordon and search" in another hamlet called Pay Kotel.
"The males were separated from the women and children and were secured with plasticuffs," it said.
A number of males "attempted to flee" but were "secured by flexicuffs". A barefoot man was seen hiding in a bush and was given a verbal warning, then a warning shot, but he ran away and was shot by "two bursts of 30mm canon fire" from a Coalition helicopter.
The Defence Force said SAS troops applied a tourniquet and bandaged the man's wounds, but he died 15 to 20 minutes later.
"These events were managed in accordance with New Zealand's international legal obligations and NZDF best practice," it said.
However, an SAS soldier told the inquiry in 2017 that he "recalled seeing one of the restrained males being held in a state of undress, and this individual was being questioned by an NZSAS trooper (through the interpreter) while the NZSAS trooper held a knife in his hand."
When questioned, "this trooper said the detained man was naked at that time as when the man was being restrained his clothes, which were old and worn, had literally disintegrated as he was being processed".
"The NZSAS trooper explained that he had the knife out as this was the weapon he was carrying and there was nothing exceptional or untoward about holding a knife at the time. The NZSAS trooper denied that he had threatened the detained person's life."
The Defence Force said military police recommended that a charge should be laid against the trooper, but the commanding officer determined that, 13 years after the incident, "there was insufficient evidence to form a reasonable belief that the charge might succeed".
"It is the NZDF's view that there were aspects of the behaviour of the NZSAS member that fell below the standards of a professional soldier and which, if not precluded by the limitation of time provisions set out in the Armed Forces Discipline Act, would have likely resulted in disciplinary charges being preferred," the Defence Force said.
"Consequently the NZSAS trooper received administrative action in 2018 which noted in his file his 'poor judgment' in respect of his actions in 2004."
"Given that charges were not laid, the NZDF has determined that the NZSAS trooper should not be named. The NZSAS trooper left the NZDF in 2018."
Investigative journalist Jon Stephenson, who reported on the Afghanistan war and co-wrote the book Hit and Run about a 2010 incident, said it was clear that things were done in the 2004 incident that most New Zealanders would not condone.
"If you read between the lines it's pretty clear that, even on the Defence Force's own account, the incident involved some very robust treatment of the locals," he said.
"The reality is that war barbarises people. As the report says, they had nearly lost a member of their patrol, and had been involved in what was clearly a life-threatening incident only hours earlier.
"It's not acceptable, but nevertheless not surprising, that they behaved in a way that the military themselves have stated was not acceptable for a New Zealand soldier."
Stephenson said the latest report was "not the end of the story". A separate inquiry is still continuing into the alleged incident in 2010, and the Australian Defence Force is holding an inquiry covering its armed forces' involvement in Afghanistan from 2005 to 2016.
