A lawyer for internet mogul Kim Dotcom has denied a suggestion that spiralling court proceedings are to delay the ultimate hearing to extradite Mr Dotcom to face copyright piracy charges in the United States.

In a vigorous exchange in the Court of Appeal today the court's president Justice Mark O'Regan repeatedly fired questions about delays at Dotcom's lawyer, William Akel.

Akel said there was no advantage to Dotcom - most of whose assets are seized world wide - in delaying the proceedings.

The Dotcom proceedings began after the police raid on his mansion more than a year ago in which large amounts of property and stored information were seized.

A judge has said that parts of the search and seizure were illegal. The Crown still wants to appeal against that basic finding.

But in the meantime it has emerged the spy agency the Government Communications Security Bureau had been illegally intercepting the communications of Dotcom and one of his business associates.

The Dotcom lawyers have, on top of the claim challenging the way the evidence was gathered, now also filed damages claims against police and the GCSB.

Those claims have become tangled though with the Crown today appealing against the ruling that the GCSB damages claim can proceed alongside the damages claim against the police. It emerged in court today though that no ruling has been made on whether the damages claim against the police can proceed.

If the GCSB can be sued for damages it would raise issues of how much the bureau would have to reveal about its activities and the information it gathered.

The High Court has ordered an independent Queens Counsel with top level security clearance can view the raw material and argue the case for its disclosure on behalf Dotcom.

Akel said the information was sought because "we don't know what we don't know" and the information may be relevant to the claim.

It has been repeatedly said at the hearing that the type of damages claimed have been limited to minimal or at most modest awards in past cases. But Akel said in the circumstances of the Dotcom case more than minimal damages might be available and might also have a bearing on the extradition proceedings.

The hearing is continuing.

- © Fairfax NZ News