The Department of Conservation (DoC) is denying that it has given the Far North Council any right to let a boat yard owner work on a public reserve.
Doug Schmuck has been battling for years for the legal right to work on boats on the Walls Bay esplanade reserve at Opua.
Local Maori, coastal care and community groups have opposed his campaign and are trying to protect the reserve as a public amenity.
Far North mayor John Carter said this week the council could now grant Mr Schmuck's wish because DoC had delegated its powers as landowner to the council.
But DoC said it had not done any special deals over Mr Schmuck.
It said the council was relying on revised delegations to local authorities under the Reserves Act, signed off last year by Conservation Minister, Nick Smith.
Councils no longer need the Minister's sign-off for certain consents, such as the granting of leases or easements over reserves.
But DoC said that does not mean councils can now approve activities the Reserves Act does not allow, such as running a private business on public land.
DoC has in the past agreed that Mr Schmuck can use rails to haul boats over the reserve up to his boat yard - but not work on them on the rails.
Doug Schmuck has not returned calls asking for comment and filed a claim in the High Court early this month against DoC, its Minister and the council.