Kim Dotcom in line for new taxpayer payout after court rules mistakes made over 52 Privacy Act requests

German internet tycoon Kim Dotcom says Prime Minister John Key is lying about what he knew about him before police raided his Coatesville home in January 2012.

Kim Dotcom's five-year battle over the refusal of Privacy Act requests to 52 government agencies is going to end in him getting a damages payout.

It's not the first time the German entrepreneur has picked up taxpayer money after pursuing the government in court over decisions made during the eight-year - so far - extradition process.

Kim Dotcom and wife Liz Dotcom at Piha in Auckland. Photo / Supplied

The Court of Appeal has found John Key's government was wrong to transfer all those requests to Attorney General Chris Finlayson back in 2015, just ahead of the extradition hearing which found Dotcom was liable for extradition to the United States.

Instead, the Court of Appeal has found the requests should have been handled by the agencies and that it was not lawful to transfer the requests to Finlayson simply because he was the Crown's legal advisor.

Dotcom and three others - Finn Batato, Mathias Ortmann and Bram van der Kolk - face extradition to the United States on charges relating to allegation of massive copyright infringement through the Megaupload website.

Megaupload was shutdown in 2012 and the four men arrested in an FBI-led global operation. If extradited to the US and convicted, the four face decades in jail.

Kim Dotcom's wife, lawyer Liz Dotcom, arriving at the Supreme Court in Wellington with NZ lawyers, from left, Ron Mansfield, Simon Cogan and Katie Creagh. Photo / File

The government had argued the Attorney General was the right place for the requests to be handled as it was the agency most closely connected to the information, a finding based on its role seeking Dotcom's extradition for the US.

Dotcom has said he made the Privacy Act requests in 2015 to find out what government agencies had been saying about him. The requests were made just ahead of his initial extradition hearing at the district court and he has said he sought information that would expose what he believes was a conspiracy to have him extradited to the US.

The government's argument at the time was that Dotcom had lodged the request as a delaying tactic over the extradition hearing. It has denied any conspiracy.

The Court of Appeal ruled that the agencies that received the requests actually held the information sought so it was for them to respond. It found it was not lawful to transfer the requests to the Attorney General as a central agency simply because Crown Law was the government's legal advisor.

The Court of Appeal also found that it could be lawful to refuse Privacy Act requests in some circumstances where it was deemed the requests were vexatious and that no "reasonable person" could accept they were made in "good faith".

The Court of Appeal has sent the case to the Human Rights Tribunal to work out damages for interference in his privacy. The tribunal original found in Dotcom's favour.

Dotcom is fresh from mixed success at the Supreme Court with a finding that he and three others involved in his Megaupload file sharing site were liable for extradition - but that they had not had a fair hearing earlier in the process.

The Supreme Court ruled that the four accused facing extradition should have the opportunity to have their arguments heard before - if still valid - the order for extradition was passed to the Minister of Justice, Kris Faafoi, for action.

Even if the extradition warrant is signed by Faafoi, there are years expected to pass before the case reaches its finality in New Zealand.

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