David Jones, QC, is asking the three appellate judges to reverse their decision to order a second trial after they quashed Mr Banks' conviction for filing a false electoral return.
Mr Jones says the Crown made a "very serious error" by not disclosing new material, known as the Butler memorandum, ahead of a previous Court of Appeal hearing in October.
At that hearing, two American businessmen gave affidavits that corroborated the evidence of Mr Banks and his wife Amanda and was "likely to have changed the outcome of the trial", if accepted.
The undisclosed evidence in question is a memorandum written by lawyer Rowan Butler who was instructed by Crown prosecutor Paul Dacre, QC, to interview Kim Dotcom about the affidavits filed by the two American businessmen before the appeal hearing.
The pair said they arrived in New Zealand on June 5, 2010 and were taken to Dotcom's Coatesville mansion, where they had lunch with Mr and Mrs Banks and Mr and Mrs Dotcom. Nothing about electoral donations was discussed, according to their affidavits.
This is at odds with evidence given at the trial, where the Crown contended the lunch was held on June 9, 2010 and the presence of the Americans was denied by the Dotcoms, as well as their bodyguard Wayne Tempero.
The defence was able to prove at the trial there was no lunch on June 9, because Mr Banks was campaigning and Mrs Banks was at work.
In finding Mr Banks guilty, Justice Edwin Wylie said Dotcom was a good witness but was wrong about the date of the lunch and ruled it must have happened on June 5.
But when interviewed by Mr Butler about the new affidavits before the Court of Appeal hearing, Dotcom accepted the evidence of the US businessmen - including that donations were not discussed at the June 5 lunch. Instead, he said there was a second lunch - again on June 9 - at which the donations were discussed.
Dotcom has now signed a new statement for the Crown that contradicts his previous evidence, which Mr Jones told the Court of Appeal means the prosecution faces "insurmountable" problems.
He said the Court of Appeal should have been made aware of the existence of the Butler memorandum at the time of the appeal, because the Crown submissions were made on a false ground.
"This Court was denied the opportunity to consider the matter fully. Why should Mr Banks suffer another minute?" said Mr Jones.
"The appellant and the Court have been kept in the dark. By the Crown. Critical information which must have made a difference to the outcome."
Mr Jones said Dotcom's new statement now confirms there was a second lunch - "diametrically opposed" to his previous position.
He read parts of the transcript of Dotcom's evidence from the trial where Dotcom was asked about the presence of the two American businessmen at the lunch where donations were allegedly discussed.
"There were no two Americans, that was a total fantasy…certainly not, no no" Mr Jones quoted Dotcom as saying.
Mr Jones said Dotcom was very specific in his evidence.
"He had ample opportunity to say there was a second lunch. He's said the Americans at the lunch was a 'fantasy' and a nonsense," said Mr Jones.
"That, in my submission, is what his latest statement is."
Other witnesses at trial, Dotcom's bodyguard Wayne Tempero and wife Mona, did not say a "dickey bird" about a second lunch, said Mr Jones.
The Queen's Counsel was questioned about why the Court of Appeal should recall its judgment, when Mr Banks had another "remedy" - he has applied for the trial judge to throw the case out.
Mr Jones said: "It's the right thing to do".
"It's a matter of justice…You have a situation when Mr Banks succeeded on appeal. This court has made a decision based on a wholly false premise. Thankfully it granted the appeal.
"The questions has to be asked:Would we have ever known about this complete change of circumstances if this Court had not granted the appeal?
The Solicitor-General Mike Heron, QC, is now making submissions on behalf of the Crown by by audio-visual link.
- Jared Savage of the New Zealand Herald
