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The 18-year-old with permanent name suppression, who attacked 15-year-old Stephen after rugby practice, was discharged without conviction at the start of this month in Auckland High Court.
Justice Helen Winkelmann's decision was challenged by Crown prosecutors who referred the case to the Solicitor-General's office for appeal.
However, in a statement released today, the deputy Solicitor-General said the Crown would not appeal the decision.
"The deputy Solicitor-General has carefully considered the facts and the relevant legislative provisions and has determined that in this particular case there is no jurisdiction to appeal or review the judge's decision," the statement said.
It also noted the "significant degree of public and media" interest in the case.
West Auckland boy Stephen died after a school rugby training session on June 6 last year. He was rushed to Auckland City Hospital but died a short time later.
The 18-year-old was to have faced trial for manslaughter but, in June, pleaded guilty to an amended charge of assault with intent to injure.
A 16-year-old boy previously came before the High Court after also admitting assaulting Stephen. He too was discharged without conviction earlier this year.
Critically, medical examinations showed an undiagnosed heart condition contributed to Stephen's death, which saw the Crown withdraw the manslaughter charge.
The Dudley family said today it was "utterly devastated" by the decision.
In a statement released through the Sensible Sentencing Trust, the Dudley's said: "We are utterly devastated at the news regarding the law not allowing for this unjustified discharge without conviction to be appealed.
"The news came as another shocking blow like the ones that killed our son.
"We ask for privacy at this time while we regroup and consider our options, but wish to thank all the members of the New Zealand public for your unwavering support - we will continue to strive for Justice for Stephen."
- By Patrice Dougan of APNZ