The lawyer for internet entrepreneur Kim Dotcom says his client will sue police and the Government's spy agency.
The High Court ruled on Thursday that the Government Communications Security Bureau (GCSB) can be called as a defendant in the case against the founder of the Megaupload website.
The ruling means that Mr Dotcom and his team now have access to any information the bureau collected when it illegally spied on him and the GSCB can be added to any claim for damages.
The United States is seeking to extradite Mr Dotcom, a German national with New Zealand residency, to face copyright infringement and money laundering charges.
His lawyer Paul Davison, QC, asked two weeks ago for the GCSB to be added as a defendant. He said he could not be confident that the bureau had revealed the full extent of its spying on Mr Dotcom and his co-accused.
Mr Davison asked for data that had been gathered and also wanted to know if the bureau had helped American authorities before New Zealand police were informed of the operation.
The Crown opposed this, saying the spy agency had accepted that it acted illegally and other information was likely to be top secret.
The Chief High Court Judge on Thursday granted Mr Davison's request and ordered the Crown to provide documents to the defence.
The court also allowed Mr Dotcom to seek damages from police and the GCSB. Mr Davison won't put a figure on the amount as yet, but says it will cover the breaches of law and the fact that they intruded on the Dotcom family's privacy and their rights.
Mr Davison said they are feeling very confident about the case and everything they have discovered along the way reassures them about that.
The case is expected to be heard early next year.
The Police Minister on Thursday refused to comment on the decision by Kim Dotcom to sue the police and the GCSB. Anne Tolley says the matter will play out in court and won't be commenting further.
New Zealand First leader Winston Peters said the taxpayer is now going to have to foot the bill for the Government's botch-ups in dealing with Kim Dotcom.
"Because of a thoughtless Government, it's going to cost us - all of us - possibly hundreds of millions of dollars. It's a tragedy for the New Zealand people, unless you like paying money to undeserving cases."