Crown lawyer Mark Lillico told the court today that the district court judge failed to recognise the seriousness of the offending, given the man had admitted to indecently assaulting his daughter.
Mr Lillico said although there were mitigating factors for the comedian, he was a father who had offended against his daughter, it was sexual offending and there was a large disparity in ages.
"There were serious consequences but it was serious offending.''
He said the judge also took into account that the comedian was intoxicated when she said he had a "low consciousness of action''.
"By doing so it seems to have watered down the level of intent required in a criminal offence.''
He said the comedian had pleaded guilty to indecently assaulting his daughter and that carries an admission of intent.
The comedian's lawyer, Marie Dyhrberg said the judge had "got it right''.
She said that at no point did the judge say that her client did not have an intent but rather that there was no premeditation involved.
"She accepts that it is at the low end of consciousness - she's not talking about intent but she is talking about it being at the lower end of calculated judgement.''
Justice Gilbert said there were some "difficult issues'' and he has reserved his decision but said it would likely be released at the end of the month.
At the comedian's sentencing District Court Judge Philippa Cunningham said the reasons for his discharge without conviction included that he "makes people laugh''.
She also said he had stopped drinking, paid a high price in his personal and work life, and had shown remorse.
"He's a talented New Zealander. He makes people laugh.
"Laughter is an incredible medicine and we all need lots of it,'' Judge Cunningham said.
The court was told then that the man went to bed with his partner after returning home drunk from a Christmas work party in December 2009. After he fell asleep, his daughter got into bed with them.
According to the police summary of facts, the man laid his daughter on her back, pulled down her pyjama pants and nappie and kissed her.
The man's partner woke up and asked him what he was doing. He replied: "I thought it was you.''
He later told police that he remembered nothing of the incident.
Judge Cunningham said a report from a forensic psychiatrist found the man had previous episodes of "unusual behaviour'' after going to bed drunk. The report said it was possible he was "not fully awake'' when he performed the indecent act.
The case was "extraordinary'', the judge said, and the consequences of a conviction would outweigh the gravity of the offence.
