A High Court judge suggested the police "probably" broke the law by faking a prosecution against an undercover officer to boost his credibility with a gang.
Justice David Collins threw out serious charges, including possession and supply of methamphetamine, LSD and cannabis, against seven members and associates of the Red Devils gang in a judgment released yesterday.
In taking the "extreme" step of ordering a stay of proceedings, Justice Collins said
Police were investigating the emerging Red Devils Motorcycle Club, who they suspected were about to become a chapter of the Hells Angels.
During a crackdown dubbed Operation Explorer, police bosses became concerned that an undercover officer known in the gang as Michael Wiremu Wilson was about to be exposed. To strengthen his credibility, police arranged for a fake search warrant of his lock-up in which they had placed apparently stolen equipment and drug paraphernalia.
Police forged an illegible signature of a court deputy registrar and arrested Wilson. He appeared on several occasions before judges who all believed they were dealing with a genuine case.
Detective Superintendent Rod Drew and Detective Senior Sergeant Warren Olsson visited then-Chief District Court Judge Russell Johnston and believed police had his permission to go through with the unprecedented ruse. Soon after Operation Explorer ended, police sought to have Wilson's charges withdrawn.
In his decision to stay the proceedings, Justice Collins said the false warrant and prosecution scenario involved the police engaging in "significant misconduct".
He said the police officers who forged the signature of a judicial officer on the 'search warrant' and the police officer who signed the fictitious information charging Mr "Wilson" probably committed offences of the imitation of a court document and making a false oath.
Imitation of a court document is punishable by a fine of up to $500, while making a false oath carries a maximum prison sentence of five years.
A senior lawyer for one of the gang members Robert Lithgow, QC, suggested in court the police may also have perverted the course of justice.
"Senior police officers devised the false warrant and prosecution scenario because they believed the ends justified the means," said Justice Collins.
"Had a private prosecutor engaged in similar tactics he or she could expect to face the full wrath of the criminal justice system.
"These observations are made solely to emphasise the seriousness of the police misconduct. It is not my intention or function to use this proceeding to punish the police."
Justice Collins concluded that he must take the "extreme" step of staying the proceedings for four reasons.
•The gravity of the police misconduct which involved misuse of the criminal justice system by those responsible for law enforcement.
•The connection between the police misconduct and the evidence which underpinned the charges.
•Allowing the trial to continue implies the Courts condone the police misconduct. "Nothing could be further from the truth".
•Maintaining the integrity of the criminal justice system to uphold public confidence.
This is the second time the charges against the Red Devils have been thrown out because of the false warrant and prosecution.
In a High Court decision released in October 2012, Justice Simon France ordered a stay of proceedings against the group who were facing a range of charges including drug offences and being part of an organised criminal group.
Justice France said he believed police thought they were acting legitimately, but a letter police gave to Judge Johnston about the situation would have been "wholly inadequate" to alert him to the realities of what was involved.
Justice France said he was surprised at the police's "lack of insight" in creating a fake search warrant.
"However one looks at it, a fraud is being committed on the courts. The judges who are dealing with it are being treated in a disrespectful way." At the time, Police Association president Greg O'Connor called the decision "disproportionate and unjustified".
"Police acted in good faith when taking these measures to protect the agent's life, and acted with the knowledge and agreement of the then-Chief District Court Judge, Russell Johnson, in doing so.
"To have the court now effectively change its mind is a slap in the face for the agent who put his life on the line for over a year."
In October 2013, the Court of Appeal unanimously overturned Justice France's stay of criminal charges laid against 20 associates of the Red Devils motorcycle club and the trial was to continue. A key element of the appellate judges' decision was because there was an understanding there was no connection between the false warrant and prosecution scenario and the evidence obtained by the police to support the charges.
In the most recent decision by Justice Collins, he said there was new evidence which showed there was a connection.