Former South Australian MP Annabel Digance and her husband Greg were charged with one count each of blackmail after allegedly threatening to make accusations of misconduct against Premier Peter Malinauskas in 2020.
Ms Digance sued Mr Malinauskas and the state of South Australia for $2.3 million for allegedly instigating what she claims was a malicious prosecution.
But in a Supreme Court judgment published on Tuesday, Associate Justice Graham Dart dismissed her claims that it was a malicious prosecution and a misfeasance of public office.
The blackmail charges stemmed from a meeting between Mr Digance and then opposition leader Mr Malinauskas in February 2020, which was recorded by Mr Malinauskas and handed to police.
Defence documents filed by the state government say at that meeting, Mr Digance demanded Mrs Digance be secured an upper or lower house seat in the SA parliament, and that a failure to do so would result in Mr Malinauskas' career being deliberately damaged.
In her statement of claim, Mrs Digance stated Mr Malinauskas reported the meeting to police in March 2020, "claiming he was a victim of blackmail".
She alleged Mr Malinauskas abused his position and engaged in misfeasance.
The blackmail charges were ultimately dropped, but the District Court erroneously recorded her as being guilty.
Last August, the state's Courts Administration Authority apologised for the error.
Associate Justice Dart's judgment says Mrs Digance stated that the criminal proceeding resolved favourably to her.
"To my mind, that misstates the situation," he wrote.
"The criminal proceedings ended by agreement ... (which) involved the applicant consenting to an … order being made against her."
A member of parliament does not have a power or de facto power to direct the police to take any particular action, Associate Justice Dart found.
"Ordinarily, you would expect a complainant to co-operate with the police in a prosecution. That does not make him the prosecutor," he wrote.
"I am not satisfied that there is a reasonable basis to establish that the first respondent was a prosecutor."
He also found that there was no misfeasance in public office if the prosecution was not malicious.
Mr Malinauskas said he was grateful for the decision, which sent a clear message to people in any position of responsibility that there is nothing to fear in doing the right thing.
"I reported conduct I thought I was duty-bound to do, and today's decision … validates actions where people stand up to do what they believe is right," he said.
"All I've ever sought to do is … the right thing, consistent with the obligations that I take very seriously as the leader of my party and as premier of the state."
The matter will return to court for a directions hearing on March 16, for both sides to be heard on the orders required as a result of the judgment.
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