The charges against Mr ul-Haque have been dropped after evidence was ruled inadmissible because of the conduct of ASIO and Australian Federal Police (AFP) officers.
In the NSW Supreme Court, Justice Michael Adams said one ASIO officer had committed “the crime of false imprisonment and kidnap at common law”.
He also referred to the unjustified and unlawful interference with Mr ul-Haque's personal liberty and the unlawful trespass of officers at his family home.
The Director of Public Prosecutions (DPP) today said it would not proceed in the case against Mr ul-Haque, who had been facing charges of training with the Pakistan-based terrorist group, Lashkar-e-Toiba.
He was accused of receiving weapons and combat training from the organisation during a visit to Pakistan in January and February 2003.
Earlier this month, Justice Adams ruled police interviews conducted with Mr ul-Haque were inadmissible as evidence because of the conduct of ASIO and AFP officers.
Outside court, Mr ul-Haque's lawyer Adam Houda said it had been a “moronic prosecution” from the start.
Terror laws had been introduced supposedly to capture terrorists, “not brilliant young men” like Mr ul-Haque, he said.
“From the beginning, this was no more than a show trial designed to justify the billions of dollars spent on counter-terrorism,” Mr Houda said. “It has been one bungled prosecution after another.
“We have all seen the disgraceful conduct afforded against Doctor (Mohamed) Haneef and today you have heard the disgraceful conduct meted out against my client.”