Fraser Milne was jailed for two and a-half years for chasing a Chinese-New Zealand family through Awhitu Peninsula near Auckland last March, causing their vehicle to flip onto its roof.
Two children in the car had taken off their seatbelts out of fear they made need to quickly escape when Milne first approached their car with his pitbull dog, swearing and shouting his dog would eat them.
All five passengers were hospitalised and the youngest child had a skull fracture, scalp laceration, small subdural hematoma and significant grazing over their body.
Milne pleaded guilty to dangerous driving, injuring with intent to cause grievous bodily harm and four charges of injuring with reckless disregard for safety in the High Court last year.
At sentencing, Justice Fitzgerald said while the man had made "abhorrent" racial slurs after the attack she found it was not racially motivated.
An appeal sought by the Crown was heard by Justice Miller, Justice Dobson and Justice Moore in the Court of Appeal at Auckland this morning.
Prosecutor Charlotte Brook said the sentencing judge erred in adopting a starting point that was too low, giving excessive discounts for mitigating features and an excessive discount for his guilty plea.
The court heard the thrust of the appeal was Justice Fitzgerald's decision to sentence Milne on the basis the attack was not motivated, at least in part, by racial hostility.
"The judge considered there was nothing to indicate that racial hatred was the underlying and predominant cause of the offending.
"With respect of the judge the Crown says that that's a misstatement of the statutory test. All that's required is that the judge be satisfied that the offending was committed, partly or wholly, by racial hatred."
Ms Brook said while Justice Fitzgerald said she wasn't downplaying Milne's racial slurs that was exactly what the sentencing judge had done.
"She disconnected his words from his actions by concluding he would have behaved in the same way no matter what the victims' ethnicity was."
