The Australian Federal Police has suffered a devastating defeat with the Federal Court finding that it misled two magistrates in a bid to secure permission for last month's botched raids on Seven West media.
In a damning ruling against Australia's top police force, the Federal Court this morning quashed all warrants used for the unprecented armed raids on Seven West's Sydney offices and lawyers for both the company and Schapelle Corby's sister, Mercedes.
Justice Jayne Jagot said the magistrates who had authorised the raids had been "led into error by the AFP" and were given false information which was fundamental to their decision to approve an armed operation against Australia's biggest diversified media company.
The AFP had falsely led them to believe that a crime had or would be committed, she said.
More than 30 police spent 12 hours searching Seven West's headquarters and the offices of Sunday Night and Pacific Magazines last month over false rumours the company had signed a seven-figure deal with Schapelle Corby for an exclusive interview after her release from Bali's Kerobokan prison.
Lawyers for both the company and Mercedes Corby launched an immediate Federal Court challenge to the operation's legitimacy, accusing the AFP of seriously misleading a magistrate, making false allegations of criminal conduct and relying an investigation based on little more than Google searches in its effort to secure the warrants used in the "Stasi-like" operation.
Last week, an embattled AFP announced it would drop the investigation and return all material seized but said this did not mean that "the original concerns that initiated the investigation were not well founded".
But in a damning judgment this morning, Federal Court judge Jayne Jagot slammed the AFP's conduct and upheld Seven West's allegations, finding that the magistrates who had approved the raids had been given false information and been misled into authorising actions "which would otherwise constitute trespass and, insofar as searches of a person are concerned, an assault."
"They represent serious intrusions into private and property rights... and the warrants should not have been issued lightly," Justice Jagot said.
The epic court battle between the country's national police force, its biggest tv network and the Corby clan centred on documents used by the AFP to get the go-ahead for the mammoth operation.
In a 43-page judgement which heavily criticised the AFP's conduct, the judge said the two magistrates had relied on the AFP's "erroneous and ambiguous" and "materially misleading" statements.
The AFP had wrongly suggested to them that individuals in the company, including a senior lawyer, were suspected of committing a criminal offence, when this was never the case.
Affadavits from two AFP officers which were presented to the magistrates also created the false impression that Seven West had failed to comply with a production order seeking any evidence of a deal the network might have signed for a paid interview with Corby.
"This was not a true position," Justice Jagot said.
Crucially, the AFP had also failed to explain to the magistrates the workings of the Proceeds of Crime Act, specifically the fact that no crime would be committed by either Corby or Seven West if a deal for a paid interview was signed.
In the urgency of the AFP's application for warrants and without being given any more detail, Justice Jagot found that the magistrates had wrongly assumed the AFP's statements were correct and that there was some offence which would justify the search orders and warrants.
The AFP has faced mounting criticism over it's decision to mount unprecedented raids on the corporate headquarters of one of Australia's biggest companies.
Armed police initially tried to stop a Seven cameraman filming their search and were forced to apologise after raid paperwork wrongly accused a company lawyer of committing a crime.
The AFP blamed the false allegation on "an innocent word-processing error".
Outside court this mornings, Ms Corby's lawyer, Sue Chrysanthou, phoned her client in Bali to break the news: "Mercedes. We've won".
She said Ms Corby would release a statement later today but was "delighted with the outcome."
Seven West welcomed the Federal Court decision.
"The Court found that errors contained in the warrants and orders, which referred to Seven personnel and solicitors as 'suspects' of an investigation and as being reasonably suspected of having committed criminal offences, could not be brushed aside as trivial or insignificant as the AFP had submitted," the company said.
"Instead, the errors were material and serious and affected the decision of the magistrate to issue the warrants.
"Seven will seek payment of its legal costs from the AFP and is considering other options available to us to redress the costs of the AFP’s failed investigation."
Seven West chief Tim Worner praised the Federal Court finding and thanked the company's legal team and staff who were affected by the raids.
"Today’s decision represents a victory for free speech given that our hard working and award winning news and public affairs team and people at The West Australian and Pacific Magazines were only doing their job in reporting on a matter of wide public interest.
"Our hard working and award winning news and public affairs team and people at The West Australian and Pacific Magazines were only doing their job in reporting on a matter of wide public interest," he said.
"We abhor the notion that it is apparently fine to seize journalists' correspondence, notes or contact lists."
He said he was glad that any implied mark against Seven had been removed, "given at all times we were co-operating with the AFP in providing material."
"This has now been accepted," he said.
"Additionally, a number of staff members were directly affected by what occurred, and we as a company are sorry they were upset in this unreasonable way. We thank them also for their ongoing commitment to Seven.
"We are all pleased by the result, although unfortunately it has been a very painful distraction."
The AFP released a three-line statement saying it would consider its options, including a possible appeal.
"It is not appropriate to comment further in relation to this matter," it said.