Key Points:

There is evidence the so-called "terror-files" were leaked to the Dominion Post by sources close to one of the accused, Jamie Beattie Lockett, a court heard yesterday.

Dominion Post editor Tim Pankhurst and the newspaper's owner, Fairfax Media, yesterday faced a charge of contempt in the High Court at Wellington for publishing the 156-page affidavit last November.

The affidavit, which police used to get search warrants, contained excerpts of bugged conversations, all of which were suppressed by Justice Tony Randerson and Justice Warwick Gendall yesterday.

Solicitor-General David Collins, QC, said publication had ruined the chances of a fair trial for the accused group facing firearms charges after raids last October.

Dr Collins described the case as being about how it is the courts, "not journalists, not newspaper editors", who determine that people's right to a fair trial is not compromised.

"The articles were the most serious and inexcusable breaches of an accused's fair trial rights that this country has ever seen."

He said there was evidence the affidavit "was leaked by someone close to one of the accused", not referring to Lockett by name, but identifying him by referring to a widely publicised bail hearing Lockett had after the raids.

Dr Collins said various sources got the affidavit, naming Dominion Post reporter Phil Kitchin, TV3 and the Herald on Sunday, but it was the Dominion Post that went ahead with full detail, also publishing it in other Fairfax publications.

Dr Collins said the Dominion Post also breached suppression orders and broke the law by publishing an intercepted conversation. He said Pankhurst played a pivotal role.

Detective Sergeant Aaron Pascoe, who swore the affidavit, said it had not been leaked by police, but had been emailed out to lawyers for the accused as part of the legal disclosure.

Hugh Rennie, QC, for Pankhurst and Fairfax, said the coverage was not sensational and memorable as Dr Collins attested, but rather the events were sensational and memorable and the coverage followed normal journalistic standards.

Mr Rennie said as police publicly said they considered terrorism charges, there had been a month of coverage about domestic terror after the raids in the Ureweras before the details of the affidavit were published.

He said with fear and concern widely held, the article actually informed and reduced that effect.

The rights of all citizens had to be balanced with the rights of the accused, and publishing the details reflected the duty an independent news media had in society.

He said the suppression orders were obscure in scope and effect, and Mr Pankhurst did not know about them.

The maximum penalty for contempt is three months' jail or a $1000 fine.

Fairfax group managing editor Paul Thompson appeared, representing the company. He and Pankhurst are to give evidence today.