The lawyer for Mark Middleton says Immigration New Zealand breached the Bill of Rights in its treatment of his client and he will be seeking compensation.
Mr Middleton, who is the step-father of murdered school girl Carla Kardno, was arrested at his work and kept in cells for several days.
He was threatened with deportation despite living in New Zealand for 56 years, after officials accused him of being here unlawfully following a trip overseas in the 1980s.
He had feared he would be deported to England, which he left with his family to come to New Zealand when he was four-years-old.
However, Associate Immigration Minister Kris Faafoi intervened and now Mr Middleton will stay in the country.
Mr Middleton's lawyer Keith Jeffries said he was considering legal action against the department. He would also seek compensation.
"The department didn't behave appropriately here. They didn't investigate the case properly. But no complaints against the minister, I think he would be disappointed with his department."
Mr Jeffries said officials still had not provided him with the copy of Mr Middleton's immigration status.