The commissioner has found the council breached principal 8 of the Privacy Act - accuracy - but the council has no plans to apologise to Mr Prassinos.
While the commissioner felt an "appropriate response" would be to remove a press statement at the centre of the issue from the council's website, the council refused, and the Privacy Commission said it had no powers to force it.
Council regulatory and corporate services general manager Roger Taylor said the press release was a part of the record of the council and the council did not consider it appropriate to change its documents.
"It was made or released at a particular time and is a searchable document for anybody who wants to check the history.
"It seems to us that it's inappropriate that the record of public evidence should be censored in any [way]."
In July, council chief executive Duncan Field issued a press statement saying the council was tiring of complaints from Mr Prassinos.
It came after police confirmed they would not press criminal charges against council staff who had removed a fence Mr Prassinos and Queenstown lawyer Greg Stewart erected around a Cardrona Hotel car park.
Mr Taylor said while the Privacy Commission had come to its finding based on the statement issued, it did not take into account the context of that statement, which was important to understand.
"Abandoned land in Cardrona was claimed by Mr Prassinos and a colleague. They fenced the land and offered the land for lease. They intended to make . . . profit from it.
"Council removed the fence that had been placed by Mr Prassinos and his colleague and as a result Mr Prassinos made a claim of criminal nuisance to the police against Mr Field.
"Whilst that's not relevant to the privacy issues . . . it's relevant to the general context," he said.
The statement said the council had endured "a long series of attacks over its credibility" from Mr Prassinos, attacks which had "consistently proved . . . to be without substance [and] an unnecessary expense to the ratepayer".
It was the use of the word "consistently" which caused the Privacy Commissioner to find the council had breached principal 8 of the Privacy Act, accuracy.
Privacy Commission legal assistant commissioner Katrine Evans said while Mr Field had been expressing an entitled opinion, the use of the word "consistently" was inaccurate "and therefore misleading".
"When a statement is made by a chief executive of a public agency, I believe that there are important considerations that person must take into account."
Ms Evans said there was a "high expectation" information would be "strictly accurate, especially when taking the unusual step of publicly criticising an individual ratepayer".
"Some", but not all of Mr Prassinos' attacks on the credibility of the council had been without substance, Ms Evans said.
"Criticising you for making attacks that were `consistently without substance' therefore falls below the high standard of accuracy that could be expected in this rather unusual situation.
"It is my view that QLDC breached principle 8 by using this wording in its media release."
Ms Evans said the council had to bear "some responsibility for the situation".
An "appropriate" response as far as the commission was concerned would be to remove the media release from the website.
"However, the council has refused to do this, and we have no power to order the council to take the statements down.
"We can therefore do nothing further to assist."
When asked by the Otago Daily Times if the finding had brought an end to the matter, Mr Taylor said "the substantial issue" had been dealt with.
"There is no further action that council is taking in respect of the decision."
When asked if the council would be apologising to Mr Prassinos, Mr Taylor said, "No."
"We are not proposing to apologise."
