In light of the admission by Prime Minister John Key that the Government Communication Security Bureau (GCSB) illegally spied on Kim Dotcom, the court today heard from both sides over whether the illegally collected information can be handed over to Dotcom.

Under the Government Communication Security Bureau Act 2003, the agency is not allowed to intercept communications by New Zealand citizens or residents. Dotcom was granted New Zealand residency in 2010.

Paul Davison, Dotcom's lawyer, says the activities of the police before Dotcom's arrest in January are of significant concern to his client's defence, and raises the question of how reliable the Crown's evidence is.

"One can't be confident at the assurance that the complete disclosure is indeed complete," says Davison.

Davison says this evidence will inform the court on how reasonable the actions of the police were in searching and seizing Dotcom's property on 21 January.

Justice Helen Winkelmann agreed that the extent of the police knowledge regarding the interception was relevant, and asked the Crown to explain why it might be withheld.

Crown lawyer John Pike says the Crown will have to "take the brunt" of the problems raised by the illegality of the interception of Dotcom, but the release of the evidence could "prejudice national security" and the process of detecting crime in the future.

Pike suggested a closed court meeting with an independent member of the bar, an "amicus", who would identify any sensitive material not to be released - including anything that could identify sources or channels of information.

The Crown says at this point it is unable to say how long this might take, with the process further lengthened by the need to search for a new amicus following the previously appointed one becoming unavailable.

The Crown says an affidavit filed by Dotcom on the 7 September was the catalyst for the investigation by the GCSB into the legality of its interception.

Dotcom's lawyer scoffed at this suggestion.

"It's surprising that Mr Dotcom's affidavit, his assertion that he was a resident, triggered the realisation by the GCSB of a failure on their part towards the statute," says Davison.

Justice Winkelmann asked Pike how the GCSB could have been unaware of Dotcom's residency status for as long as it did, to which Pike replied that information would come out following an internal investigation.

Frustrated by the pace of the trial, Justice Winkelmann questioned the likelihood of Dotcom's extradition hearing scheduled for March 2013.

"This case is dribbling along because we're going from one thing to another," says Winkelmann.

"Enough is enough, is enough."

Winkelmann says the next step is to appoint a new amicus, and asked for suggestions from both the Crown and Dotcom's lawyer. Winkelmann also granted the release of the Prime Ministerial Certificate into the GCSB’s interception.

Speaking to the court before today's hearing, Dotcom says the government has underestimated the New Zealand court system and the media scrutiny of the trial.

"The courts will see through this," says Dotcom.

"It's in New Zealand's interest that we get to the bottom of this."