The Defence Force says it must learn from mistakes that saw three soldiers burned in a training exercise gone wrong.
NZDF was ordered by the court to pay $450,000 in fines and reparation.
A mock riot staged at Linton Military Camp in 2020 was to prepare soldiers for peace-keeping duties. But two of them were doused in petrol and then caught fire when a Molotov cocktail was thrown.
The third suffered less severe burns when one of the panicked soldiers ran into him.
Chief of Army Major General John Boswell told Checkpoint it should not have happened.
"Regrettably, decisions were made are actions were taken that night that shouldn't have been. Three soldiers were injured as a result.
"And it's right that the army was held accountable for that yesterday."
The court found there was no fire retardant gear, no training in throwing those Molotov cocktails and less structure to the exercise.
"From those occasions where we fail, and we clearly did on this occasion, and mistakes were made ... we'll admit it, we'll learn from it and we'll do everything we can to ensure that it doesn't happen again."
In the Palmerston North District Court on Tuesday, the New Zealand Defence Force was fined $354,750 and ordered to pay $100,000 reparation to the three injured soldiers.
"We have fully supported those soldiers through the issues that they've faced since the incident with both medical and psychological care, and we will continue to do so.
"They continue to remain employed within the New Zealand Army and will continue serving as soldiers in our organisation for as long as they wish to."
He said an investigation was conducted immediately after the incident.
"And we placed a moratorium on public order management training at that time.
"We then convened a Court of Inquiry to examine the incident in detail which has resulted in 12 recommendations, 11 of those instantly accepted, the twelfth has been incorporated into a wider review.
"The key areas identified by the Court of Inquiry included the use of flame retardant clothing, the employment of incendiary devices, where there are gaps in our doctrine, the need to adhere to risk management plans and other safety practices related to this type of trend.
"We undertook a full military police investigation and I've instigated an army-wide training and safety review to review the wider army training system as a result."
