The Crown is appealing against the High Court's ruling last year that the search warrants were too generic and did not adequately describe the offences they were related to.
In her decision, Chief High Court Judge Justice Helen Winkelmann also ruled the removal from New Zealand of cloned hard drives seized from the Dotcom mansion was unlawful.
Opening the Crown case in the Court of Appeal in Wellington this morning, lawyer David Boldt said there were clumsy errors in the warrants, but that did not make them invalid.
He said the warrants were not excessively broad and they adequately conveyed what was sought when read as a whole.
Dotcom's lawyer Paul Davison QC told the court this afternoon that Justice Winkelmann was entirely correct that the search warrants were unlawful.
"The purpose of a search warrant has been and always was to specify, in sufficient detail, the nature and extent by which lawful intrusion into a person's private life was authorised by the law," he said.
"The whole process of this matter was woefully, ineptly handled at almost every level."
Mr Davison said the seizure of items from Dotcom's mansion was "wholesale and indiscriminate" and an unprecedented invasion of privacy.
Police had acted on the authority of the Attorney-General, after receiving a request from the United States, in executing warrants to seize items relevant to breach of copyright and money laundering.
Those allegations were categorically denied by Dotcom.
Mr Davison said police had seized a vast number of items, including personal computers and hard drives belonging to Dotcom and his family.
Some 150 terabytes of data was seized, which was equivalent to 150 million books of 500 pages each. That illustrated how expansive and indiscriminate the seizure was, Mr Davison said.
Clones of hard drives had been handed over to US authorities but Dotcom was still being denied access to his data, which Mr Davison said was a gross miscarriage of justice arising from the unlawful warrants.
Earlier, Mr Boldt said the Crown did not shrink from the fact there were errors in the warrants.
However, they were errors of "clumsiness" rather than errors that made them a nullity.
"It simply is a case of clumsiness or sloppiness in translating the application into a warrant."
Mr Boldt said the warrants were not excessively broad and set out to do exactly what Justice Winkelmann said they ought to.
He said what the warrants had sought was adequately conveyed when read as a whole.
It was clear from the warrant applications that Dotcom's Mega business was a "front" that purported to act as a legitimate file storage and file sharing site, Mr Boldt said.
The warrants made it clear that the entire business was a copyright infringing entity designed to look like a legitimate entity, and therefore anything that contained evidence about the business would be relevant to the criminal inquiry.
The appeal before Justices Ellen France, Anthony Randerson and Douglas White is set down for one day, with submissions due to finish this afternoon.
