The order comes after the government inadvertently took confidential legal files belonging to Mohamed Mahjoub, who has been imprisoned or under house arrest for a dozen years based on secret evidence.
In reaching his decision, Federal Court Justice Edmond Blanchard decided to the banish the 11 Dept. of Justice lawyers and clerks "in the interest of ensuring public confidence in the administration of justice."
Blanchard had harsh words for Ottawa's "negligent" conduct, saying the seriousness of the consequences "cannot be overstated."
Ottawa accuses Mahjoub, 51, an Egyptian citizen living in Toronto since 1995, of posing a threat to public safety. It first slapped him with a national security certificate in 2000.
The father of three, who remains under house arrest, has been fighting to clear his name, claiming abuse of process.
Last summer, government lawyers inadvertently took confidential files belonging to his legal team from a locked courthouse room.
Mahjoub's lawyers argued the document seizure had irreparably damaged his right to a fair process and violated his constitutional rights.
They said the government had breached two fundamental tenets of the justice system: solicitor-client privilege and litigation privilege.
Blanchard agreed to a point — but refused to toss the proceedings despite finding the situation "an affront to fair play and decency."
He found the government had not examined the Mahjoub files in any detail.
Society's interest in seeing the case decided on its merits outweighs the prejudice to Mahjoub, the judge decided.
"The conduct of the ministers (government), although negligent, was unintentional."
Mahjoub, who has never been charged with any crime in Canada, expressed disappointment at the decision.
"I thought that this time finally justice would be served and that I would be freed," Mahjoub said.
"Another year of my life gone, and who pays the price?"
Mahjoub's supporters were outraged and his lawyers said they were pondering an appeal.
One of his lawyers, Yavar Hameed, called the situation unprecedented.
"The circumstances of this case and the prejudicial nature of documents seized distinguish this as perhaps one of the clearest and damaging cases of document seizure in Canadian judicial history," Hameed said.
Although he refused to stay the proceedings, Blanchard did say Mahjoub can use the charter breach related to the seized documents and the delay sorting out the mess caused in his ongoing battle to toss the proceedings as an abuse of process.
The government alleges he had high-level links to a terrorist organization in Egypt, which he fled in the mid-1990s.
Documents obtained earlier by The Canadian Press show Canada's spy agency conceded several years ago that most of its evidence was derived from sources linked to torture.
The government insists Mahjoub still has extremist beliefs and remains a threat to public safety despite having had no contact with former associates for 16 years.
Canada has been unable to deport him because of the likelihood he could be tortured.