The £1 million prosecution of a local newspaper journalist and the police source who “leaked” stories to her collapsed yesterday after evidence gathered against them in a police bugging operation was declared inadmissible.

The 18-month-long case and investigation - monitored at senior levels in Whitehall and described in court as “Orwellian” - was thrown out when a judge ruled that operations mounted to identify the reporter's sources were a violation of human rights.

Judge Edward Southwell said there was nothing in the information allegedly leaked to Sally Murrer, a part-time reporter on the Milton Keynes Citizen, by Mark Kearney, a former detective sergeant, which touched on national security or serious crime. It did not justify the intrusive investigation by Thames Valley Police.

The case has parallels with the investigation into Home Office leaks that led to the arrest of Damian Green, the Conservative Shadow Immigration Minister, who was detained on suspicion of aiding and abetting misconduct in a public office - the same offence with which the reporter was charged.

Ms Murrer, 50, was arrested three times, held overnight in cells and strip-searched as part of an operation likened by her lawyers to the actions of secret police in authoritarian states.

“I don't feel victorious, I feel violated,” she said. “We have been through all of this for nothing. There was no evidence to warrant an investigation never mind a prosecution.”

The prosecution was on a list of sensitive cases after Mr Kearney, 49, was revealed last year as the officer who recorded prison conversations between a Labour MP and a terror suspect. That disclosure was part of his defence case, intended to show that he had been party to but did not leak sensitive information, and did not form any part of the charges against him.

But his role as a covert policeman in a high security jail meant that the case was monitored at senior levels in the Crown Prosecution Service, the Home Office , the Police Service and the Ministry of Justice. All departments face questions about how such a case came so close to trial despite the evidence having been gathered in blatant breach of British and European law.

The judge rejected the evidence on Tuesday, then, even though the case involved press freedom, barred the media from reporting his judgment until the Crown considered an appeal.

Sir Allan Green, QC, prosecuting, said yesterday that the ruling was “terminating” and there would be no appeal. He added: “We invite [the judge] to direct verdicts of not guilty, which will result in immediate acquittal.” The judge found that although there appeared to be evidence of Mr Kearney passing confidential information to Miss Murrer, they were protected as a journalist and source under British and European law.

The judge said: “In many ways it's a startling ruling for me, sitting as a judge in a Crown Court every day, to be forced to.” But he said he was “effectively bound” by rulings in Britain and across Europe in cases where states had used heavy-handed methods to try to prosecute reporters.

All charges against Miss Murrer and Mr Kearney were dismissed. So too were related charges against Derek Webb, 53, a former policeman and friend of Mr Kearney who worked as a private detective and tipped off tabloid newspapers. A charge against Mr Kearney's son Harry, 21, a British Army sapper, was also dropped.

Ms Murrer's defence team argued successfully that her right to freedom of expression under article 10 of the European Convention on Human Rights had been violated.

Gavin Millar, QC, told the court: “The measures used by Thames Valley Police against Sally Murrer are familiar in authoritarian states where the police are used to discourage the media from reporting on issues of public interest using confidential sources. Thankfully because of article 10 they are almost unheard of here. This case is, sadly, a rare exception.”

Mr Millar said that the course of action to attempt to get a journalist to disclose a source was to seek an order in the civil courts. Instead, Thames Valley began Operation Plaid, aimed at trapping Mr Kearney and any journalists he might have spoken to.

A spokesman for Thames Valley Police said the force was “disappointed” with the collapse of the case. He added: “Thames Valley Police behaved entirely properly in obtaining evidence that Mark Kearney passed information to a journalist.”

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