The decision overturned his earlier ruling and came after the defence presented further information that directly contradicted police evidence and showed the force had not given the defence vital details on database searches.
"There is little doubt that the accused are major drug offenders," Justice Allan said in a judgment made on August 5 last year but released only after Herald inquiries.
"The general public is likely to view the result with some dismay, but there are wider interests at stake.
"The court is obliged to accord very significant weight to the maintenance of a justice system that is above reproach."
The police operation was led by Detective Sergeant Rod Carpinter and Constable John Grantham.
Mr Carpinter is now a senior sergeant and the Matamata-Piako region's sub-area manager, having been promoted on June 22 last year - less than two months before Justice Allan's criticisms sparked an investigation.
His high-profile cases include leading the investigation into the murder of horse breeder Helen Meads.
Superintendent Win van der Velde, Waikato's district commander, said criticism of police actions was taken seriously.
"This case was promptly referred to police by the Hamilton Crown Solicitor, where a decision was made to commence an internal investigation."
Both Mr Carpinter and Mr Grantham have remained on duty while under investigation.
Mr van der Velde did not rule out a subsequent criminal inquiry upon the completion of the internal investigation. "The investigation is yet to determine the outcome."
Police raided the residence of one of the drug offenders - referred to as "M" - to locate his young daughter (found later that day in Hamilton).
A relative of the girl had told police that she might be the subject of physical abuse.
The Crown argued that the search was justified because the Children, Young Persons and their Families Act 1989 authorises a warrantless search where critically necessary to protect a child from injury or death.
Central to police justifications was information Mr Grantham obtained months earlier from an informant.
Mr Grantham was told that an unspecified rural Waikato address was being used as a meth lab by a man and an associate called either "M" or another very similar name.
Police said the information significantly heightened their concerns for the child's safety.
However, defence lawyer David Jones, QC, later obtained records of extensive police database searches on two men made by Mr Grantham shortly after he received the informant's information.
Neither of the men identified and searched for by Mr Grantham was "M".
There was no record of any database searches for "M" prior to the raid, despite Mr Grantham repeatedly claiming in evidence that he had done so.
Crucially, details of the searches were not later provided to the defence or the court as required, and Mr Grantham would later claim print-outs of the searches were "misfiled".
He and Mr Carpinter did database searches for "M" only after the raid, as the database had been offline earlier in the day.
Justice Allan had previously ruled in June 2010 that although the raid was illegal and "muddled and sloppy", the seriousness of the offending outweighed the rights of the men.
However, when the database search records were presented at a subsequent hearing, he reversed his decision.
"[Police] could link a methamphetamine-related risk to the property if they ignored the clear distinction between "M" on the one hand and [the men identified in database searches]," Justice Allan noted.
He said it was "difficult to accept" that Mr Carpinter would have been unaware of the database searches' implications.
"I consider both the defence and the court have been materially misled by a failure to disclose important evidential material."
The judge continued: "The police were consciously reckless ... My concern is heightened by the tendency of some of the police evidence to paint an incomplete picture."
CRUCIAL CHANGE OF MIND
* May 18, 2009: Police raid finds 1.6kg of meth.
*June 30, 2010: High Court judge in Hamilton rules evidence can be used.
*August 5, 2011: Ruling reversed, charges dropped.
Judge Christopher Allan
June 30, 2010 ruling:
* Raid was illegal and "muddled and sloppy", but not intentionally so.
* Evidence allowed because the public interest in convicting such serious offending outweighed the rights of the men.
* "Had I concluded that the police acted dishonestly ... the outcome would have been different," the judge noted.
August 5, 2011 ruling:
* Reversed his earlier decision and said: "I consider both the defence and the court have been materially misled by a failure to disclose important evidential material."
* "The court is obliged to accord very significant weight to the maintenance of a justice system that is above reproach."
