The incident heightened fears among settlers of an armed Māori insurrection and created the first major challenge to the authority of Governor Robert FitzRoy, who took up his posting in New Zealand six months later. Fitzroy was strongly criticised by settlers and the New Zealand Company for his decision to let the Māori perpetrators of the killings go unpunished.
The New Zealand Company had built a settlement around Nelson in the north of the South Island in 1840. The settlement had been planned since its conception in April 1841 to be , but by the end of the year, even as allotments were being sold in England, the company's agents in New Zealand were having difficulty in identifying – let alone buying from local Māori – available land to form the settlement. The settlers began to purchase large areas of land from the Māori without reference to the newly-established colonial government and often without establishing vendors' rights to sell the land on offer. The situation led to tension and caused disputes between the two parties.
In January 1843 Captain Arthur Wakefield, who had been despatched by the New Zealand Company to lead the first group of settlers to Nelson, wrote to his brother, Colonel Edward Gibbon Wakefield, one of the principal officers of the New Zealand Company, that he had located the required amount of land at Wairau, an average distance of 25 km from Nelson. He held a false deed to the land, having bought it from the widow of a whaler who claimed in turn to have bought the land from Te Rauparaha of the Ngāti Toa iwi, and acknowledged in a letter to the company in March 1843: "I rather anticipate some difficulty with the natives."
The source of the likely difficulty was simple: Te Rauparaha and Te Rangihaeata believed that their people owned the land and had not been paid for it. But similar disputes had been previously settled through negotiation and Te Rauparaha was willing to negotiate on the Wairau land.
In January 1843 Nohorua, the older brother of Te Rauparaha, led a delegation of chiefs to Nelson to protest about European activity in the Wairau Plains. Two months later Te Rauparaha himself arrived in Nelson, urging that the issue of the land ownership be left to Land Commissioner William Spain, who had begun investigating all the claimed purchases of the New Zealand Company. Arthur Wakefield rejected the compromise, informing Te Rauparaha that if local Māori interfered with company surveyors on the land, he would lead 300 constables to arrest the Māori chief.
Wakefield duly despatched three parties of surveyors to the land. They were promptly warned off by local Māori, who damaged the surveyors' tools but left the men unharmed.
Te Rauparaha and Nohorua wrote to Spain on May 12, begging him to travel to the South Island to settle the company's claim to Wairau. Spain replied that he would do so when his business in Wellington was complete. A month later, with still no sign of Commissioner Spain, a party led by Te Rauparaha travelled to Wairau and destroyed all the surveyors' equipment and shelters that had been made with products of the land, including wooden pegs and roughly-built thatched huts. The surveyors were rounded up and sent back to Nelson, again unharmed.
Bolstered by a report in the Nelson Examiner newspaper of "Outrages by the Maori at Wairoo", Wakefield assembled a party of men, including newspaper editor G. R. Richardson and about 24 labourers press-ganged into service, and swore them in as special constables. Police Magistrate Augustus Thompson issued a warrant for the arrest of Te Rauparaha and Rangihaeata – whom Wakefield referred to in a letter as a pair of "travelling bullies" – and commandeered the government brig, which was in Nelson at the time.
On the morning of June 17 the party, its size swelled to about 60 including chief surveyor Frederick Tuckett and others who had joined the party after landing, approached the Māori camp. The men were issued with cutlasses, bayonets, pistols and muskets. At the pa on the other side of a stream, Te Rauparaha was surrounded by about 90 warriors as well as women and children. He allowed Thompson and five other men to approach him, but ordered the rest of the British party to remain on their side of the stream.
Thompson immediately adopted an aggressive approach. He refused to shake hands with Te Rauparaha and said that he had come to arrest him, not over the land issue but for burning "houses". Te Rauparaha pointed out that the huts had been made from rushes grown on his own land and thus he had burnt his own property.
Despite that, Thompson insisted on arresting Te Rauparaha and produced a pair of handcuffs, angering the chief further. Thompson called out to the men on the far side of the stream, ordering them to fix bayonets and advance, but as they began to cross, a shot was fired by one of the Europeans, sparking gunfire from both sides. The Europeans retreated across the stream, scrambling up the hill under fire from the Ngāti Toa. Several people were killed on both sides.
Te Rauparaha ordered the Ngāti Toa warriors to cross the stream in pursuit. Those Europeans who had not inititially escaped were quickly overtaken. Wakefield called for a ceasefire and surrendered along with Thompson, Richardson and 10 others. Two of the Europeans were killed immediately.
Rangihaeata then demanded "utu", or revenge, for the death of his wife Rongo – who was also Te Rauparaha's daughter – who had been hit by a stray shot while sitting beside a fire. All the remaining captives, including Thompson and Captain Wakefield, were then either fatally shot or clubbed to death.
Four Māori died and three were wounded in the incident, while among the Europeans the toll was 22 dead and five wounded.
Reverberations of the massacre were felt as far away as England, where the New Zealand Company was almost ruined by the news of British citizens being murdered by barbarous natives. Land sales almost halted and it became obvious the company was being less than honest in its land purchasing tactics.
In the Nelson area settlers became increasingly nervous, and one group sent a deputation to the Government complaining that those who had died had been discharging their "duty as magistrates and British subjects ... the persons by whom they were killed are murderers in the eyes of common sense and justice".
In late January or early February 1844 – a month after taking up his post – incoming Governor Robert Fitzroy visited Wellington and Nelson in a bid to quell the hostility between Māori and European, particularly in the wake of the Wairau incident. So many conflicting statements had been published that it was impossible for him to decide who had been at fault. However he immediately upbraided New Zealand Company representatives and the editor of a Wellington newspaper, The New Zealand Gazette, for their aggressive attitude towards Māori, warning that he would ensure that "not an acre, not an inch of land belonging to the natives shall be touched without their consent". He also demanded the resignations of the magistrates who had issued the arrest warrants for the Māori chiefs.
From Nelson he and his officials sailed to Waikanae in the North Island, where he conducted a one-man inquiry into the Wairau incident. He opened proceedings by telling a meeting of 500 Māori: "When I first heard of the Wairau massacre ... I was exceedingly angry ... My first thought was to revenge the deaths of my friends, and the other pakeha who had been killed, and for that purpose to bring many ships of war ... with many soldiers; and had I done so, you would have been sacrificed and your pas destroyed. But when I considered, I saw that the pakeha had in the first instance been very much to blame; and I determined to come down and inquire into all the circumstances and see who was really in the wrong."
Te Rauparaha, Rangihaeatea and other Māori present were invited to recount their version of events, while Fitzroy took notes and interrupted with further questions. He concluded the meeting by addressing the gathering again, to announce he had made his decision: "In the first place, the white men were in the wrong. They had no right to survey the land ... they had no right to build the houses on the land. As they were, then, first in the wrong, I will not avenge their deaths."
But Fitzroy told the chiefs they had committed "a horrible crime, in murdering men who had surrendered themselves in reliance on your honour as chiefs. White men never kill their prisoners". He urged European and Māori to live peaceably, with no more bloodshed.
Settlers and the New Zealand Company were incensed by the Governor's finding, but it had been both prudent and pragmatic: Māori outnumbered settlers 900 to one, and many iwi had been amassing weapons for decades, giving them the capacity to annihilate settlements in the Wellington and Nelson areas. FitzRoy knew it was highly improbable that troops would be despatched by the British Government to wage war on the Māori or defend the settlers. FitzRoy's report was also endorsed by Colonial Secretary Lord Stanley, who said the actions of the party led by Thompson and Wakefield had been "manifestly illegal, unjust and unwise", and that their deaths had occurred as a "natural and immediate sequence". William Williams, a leading Church Missionary Society missionary, also clearly apportioned blame to "our countrymen, who began with much indiscretion & gave much provocation to the natives".