Numerous South Australian corruption prosecutions are “paralysed” by a District Court finding that SA’s anti-corruption watchdog acted illegally in the case against MP Troy Bell, a court has heard.

Earlier this month, Mr Bell — the independent Member for Mount Gambier — lost a bid to have his criminal prosecution put on hold indefinitely, but Judge Liesl Chapman found the ICAC exceeded its powers by directly referring Mr Bell's case to the DPP, and continuing to investigate once charges had been laid in 2017.

Mr Bell has pleaded not guilty to 20 counts of theft and six counts of dishonestly relating to the alleged misappropriation of $2 million of public funds during his time running an education provider.

Judge Chapman this week has refused to allow the Director of Public Prosecutions (DPP) to refer her findings to the Full Court for review.

The decision could allow Mr Bell's defence team to ask the court to throw out all evidence obtained by the Independent Commissioner Against Corruption (ICAC) during its probe.

“I do not underestimate what the findings of unlawfulness will have on this case,” Judge Chapman said.

DPP Martin Hinton QC said that if Mr Bell was successful and evidence obtained by ICAC was excluded from the trial; “our whole case goes”.

Mr Hinton told the court that Judge Chapman's finding is having a “catastrophic effect”, because all the body’s current prosecutions were illegally referred to his office directly, bypassing police.

“There are 11 matters with my office so when we speak of the state of paralysis, I'm talking about these,” he said.

He said his office had been “paralysed” by the judgement.

“We will now have to tread warily around what we do with the individual former investigators for ICAC,” he told the court last week.

“There is no way around the complex situation we are in. No-one foresaw this but we are in it, so there will be delay.

“It travels well beyond this matter. In fact, it affects virtually all matters that are currently in my office because they have all been referenced directly.”