Bruce Van Essen and Jason Patterson took a civil case against the Attorney-general and private investigators working for ACC after the men's homes were searched in 2006, during investigations into whether they were working while receiving ACC benefits.
ACC suspected Mr Van Essen was running a website business and Mr Patterson conducting surfing lessons.
The men claimed in court that their rights to be free from unreasonable search were breached, that police and ACC investigators Peter Gibbons and Graeme Scott acted in bad faith, that there was misfeasance in public office, and that the invasion of their homes and the taking of their property amounted to trespass and conversion.
Mr Van Essen also claimed malicious procurement of a search warrant.
Early in a hearing in Dunedin late last year the Crown admitted the warrants in both cases were unlawful.
In his recent decision, Justice Christian Whata agreed Mr Van Essen and Mr Patterson were entitled under the Bill of Rights Act to be free from unreasonable search and seizure, but upheld none of the men's other claims.
He said when police were brought in by ACC to carry out the searches the warrants they used were unlawfully obtained, poorly drafted and did not have enough information from ACC to justify the searches.
Compounding matters, the officer in charge of preparing Mr Van Essen's application, Constable Andrew Henderson, was the son-in-law of Mr Gibbons, who was a former senior police officer.
Mr Scott, who was the ACC informant in Mr Patterson's case, was also a former senior police officer well known to the officers who obtained the warrants.
Justice Whata said the searches went too far and irrelevant personal information was seized.
Justice Whata said the searches went too far and irrelevant personal information was seized.
There had been an ''almost forensic interrogation into the most private spaces and affairs of both [men]''.
Both men also had seized property kept from them for a long time.
The conduct in both cases failed to adhere to the minimum standards of independence expected of the police in the conduct of their investigations, he said.
He found the motives of Mr Gibbons and Mr Scott were proper and their investigations professional, although ACC ''too readily adopted processes that were highly invasive of the privacy of their clients and it seemed it failed to recognise that, like the police, as an agency of government, it was bound to observe the rights affirmed under the [Bill of Rights]''.
Justice Whata said damages were necessary because of the injustice to Mr Van Essen and as a mark of the court's disapproval.
While he was satisfied no actual abuse occurred in the case, the failure by senior Dunedin police staff to properly manage the conflict of interest arising from Const Henderson's relationship with Mr Gibbons seriously aggravated the misconduct.
''The unchecked odour of improper influence and the potential for abuse of police powers for personal benefit is a matter of significant public concern.''
The nature of the conflict in Mr Patterson's case did not trigger the same sense of injustice, and the intrusion was not so deep.
He ordered the Crown pay Mr Van Essen $10,000 damages and gave both men indemnity from legal costs.
With regards to the other matters, he ruled the pair had not established police and ACC investigators had acted in bad faith, which meant the claims based on malice and/or misfeasance in a public office could not succeed, either.
The officers and investigators had a proper basis to seek the warrants, were pursuing what they thought was a valid line of inquiry and had not been aware of the failings of the warrants, he said.
A 2008 Independent Police Conduct Authority report criticised Dunedin police for the way they handled the warrants. Police said afterwards they had accepted its recommendations.
Acting southern police district commander Superintendent Richard Chambers said police accepted Justice Whata's findings.
Mr Van Essen said he was pleased the judge noted he had every right to bring the complaint to court.
Asked if he was going to appeal any part of the decision, he said he was still considering his options.
Mr Patterson said he would appeal, particularly the ruling that he was not so affected by the search as Mr Van Essen.
A spokeswoman from Crown Law said no decision had been made on an appeal from that quarter.
