It is at the court's discretion to grant a declaration.
The main issue is not privacy, but whether such a declaration would interfere with the police investigation, which began after Mr Key laid a complaint.
Mr Collins said a declaration was outside the court's jurisdiction because it was proper for the police to conduct its affairs independently and objectively.
"It is a constitutional principle that prosecutorial decisions are with the police ... the applicant [Ambrose] can make his argument in court if he is charged."
Ambrose's lawyer Davey Salmon replied that the declaration would not be binding, nor would it prevent the police from bringing a case to be tested in a criminal court.
"Everything the police might do, the police can do."
But Justice Helen Winkelmann challenged him.
"The court would effectively be interfering by giving a ruling about the legality. We would be placing ourselves in a position in the process of criminal justice where we don't normally sit.
"We normally sit at the end. We don't normally sit at any other point along the way."
Mr Collins said he was not aware of any case where a ruling had been made relevant to an ongoing case where future prosecution was possible.
Earlier, TV3 agreed with Ambrose that the conversation was public, conducted in the middle of a "political theatre" to which media were invited.
TV3 lawyer Julian Miles, QC, said publishing the tape was in the public interest.
"There is a duty on the media in these circumstances to bring significant information to the electors."
Mr Salmon said no one at the event was asked not to listen to the conversation or not to record it - despite the request to remove recording devices from the table.
The court viewed raw camera footage showing a print journalist in the cafe doorway close enough to listen and to record.
Mr Collins said two people were entitled to a private conversation regardless of whether it took place within the context of a political event.