Representing Worksafe NZ, lawyer Marcus Zintl said a disputed facts hearing would have "no useful purpose", particularly as a conviction would carry no penalty under the law for a Crown agency.
Judge Saunders noted that four weeks had already been set aside to hear the case, which had been pending since June last year.
He said he was reluctant to waste further court time and indicated he would impose time limits to ensure the facts were clarified "within a month", before transferring the case to the Wellington District Court.
Mr Zintl said Kiwi Rail could not be fined as a result of any prosecution, there was no recourse for reparation and there were no 'victims'.
However, Worksafe was still seeking to have a prosecution entered.
Judge Saunders then asked what was the point "of all this palaver".
"I'm going to require you people to identify what is in dispute ... Is KiwiRail so precious about their record that they don't want a conviction entered?"
The principle behind the prosecution was "to ensure the safety of workers", Judge Saunders said, noting the court's main concern would be if workers had been exposed to carbon monoxide poisoning in the Otira Tunnel.
Mr Zintl said Worksafe was satisfied that KiwiRail had now taken steps to mitigate the risk.
The judge said it was time to "put up and shut up", giving Kiwi Rail until October 16 to identify disputed facts, with an indicative court date of December 14, in Wellington.