"Neither has a history of violence," Justice Peters said.
"Neither has ever been found to be in possession of a weapon.
"Neither has ever been associated with a gang."
The plaintiffs were embarrassed and humiliated, she said.
They contend the search was "unlawful because there was no belief that
either had an unauthorised item in their possession, let alone a belief held on
reasonable grounds".
The strip searches of Taylor and Smith on October 21, 2016, were "unlawful and unreasonable", in breach of the New Zealand Bill of Rights Act 1990, she said.
Justice Peters said ordered the Attorney-General to pay to Taylor and Smith compensation of $1000 each.
However as litigants in person, the plaintiffs were only entitled to recover costs in exceptional circumstances.
"This case is not exceptional. However, I do award reasonable disbursements. I expect these will be agreed but any dispute is to be determined by the Registrar."
Background history on Arthur Taylor
Taylor was first convicted was for forging entries in his savings bank deposit book in 1972.
He gained notoriety in 1998 when he escaped from Auckland Prison alongside three others, including murderer Graeme Burton, but was returned to prison following a massive and expensive police hunt.
Taylor would escape from prison again in 2005.
In 2010, Taylor started challenging a ban on smoking on prison property as unlawful. The High Court ruled in his favour three years later.
In 2015, the High Court ruled in Taylor's favour in declaring that a statute that prohibited prisoners from voting is inconsistent with the New Zealand Bill of Rights.
In 2016, Taylor brought a successful private prosecution for perjury against Witness C from the Tamihere case.
In March this year, Taylor was turned down for parole for the 19th time.
Background history on Phillip Smith
Smith, was sentenced to life imprisonment for murder, paedophile offending, aggravated burglary and kidnapping in 1996.
He had molested a 13-year-old-boy over a three-year period, and later stabbed the boy's father to death.
He was given a minimum non-parole period of 13 years. He has sought but been denied parole.
Smith began to lose his hair in 2001 and sought approval from the Auckland Prison manager to wear a wig in 2012.
A psychological assessment supported his claim that it would improve his self-esteem and confidence, and aid his rehabilitation.
He received a custom-made wig in April 2013.
He then used it to disguise himself when he fled to Brazil while on temporary release in 2014.