UPDATE: Crikey has won — for the moment — its bid to prevent the suppression of how The Australian obtained a confidential briefing from the Australian Federal Police over the Operation Neath anti-terrorism operation.

However, the AFP may appeal the decision to the Supreme Court this afternoon, and the key document is not yet public.

In the Melbourne Magistrates court this morning, magistrate Peter Mealy rejected arguments from the Australian Federal Police that releasing details of a conversation between Commissioner Tony Negus and the then-editor of The Australian, Paul Whittaker, would threaten national security.

The account of the conversation has been described in court as likely to cause “considerable embarrassment” to Whittaker if disclosed.

Mealy said the conversation was an important part of the case against Simon Artz, accused of leaking information to The Australian, because it demonstrated the seriousness of his alleged offence.

If “a media organisation” (meaning The Australian) disputed the accuracy of the record of the conversation, then it had the means to put its own version, he said.

The application for suppression of the conversation was contested by lawyers acting for Crikey and The Age. The AFP and News Limited are co-operating in an attempt to have details of the conversation, contained in five paragraphs of a statement by Negus, suppressed.

Before the court broke for lunch, the lawyer for the AFP said he would seek instructions on whether to appeal the Magistrate’s decision.

Negus is scheduled to give evidence at 2.15pm this afternoon.

*Follow @margaretsimons on Twitter for updates

Margaret Simons reported this morning …

The leak of information about the anti-terrorism Operation Neath to The Australian had been “gut wrenching” to police involved, and had taken away the possibility that the investigation could be prolonged and more arrests made, the Melbourne Magistrate Court was told today.

The Australian Federal Police officer in charge of Operation Neath, Detective Superintendent Damian Appleby, said that at the time he was informed of the leak, the AFP had been considering delaying the raids until mid-August 2009 so the investigation could be widened and more arrests made.

When the AFP heard The Australian had the leak “that possibility was taken away from me”. He feared the publication of the leak would cause the people under investigation to bring forward their plans to “machine gun” Australians, or that they might conceal evidence.

He also didn’t know whether other media had also been tipped off. He regarded thousands of hours of work by the AFP and Victoria Police as being at risk.

The raids were conducted on August 4, after extensive negotiations with The Australian that resulted in news of Operation Neath being published on the same day — but with copies of the paper available in Melbourne some hours before the raids.

At the time of writing, legal argument is underway about whether evidence concerning those negotiations should be made public. This includes a record of a conversation between the then editor of The Australian Paul Whittaker and AFP Commisioner Tony Negus. Commissioner Negus is expected to give evidence later today.

As previously reported in Crikey, the AFP and The Australian are co-operating in attempting to have the contents of the conversations between Negus and Whittaker kept confidential.

Lawyer for Crikey and The Age, Sandip Mukerjea, has argued that the conversation goes to the heart of the seriousness of the leak alleged against Artz, because it shows the uncomfortable position the AFP were placed in by the alleged offence. Publication of the details of the conversation was part of fair and accurate court reporting, he said.

Lawyers for the AFP are arguing that publication of the material would threaten national security, by prejudicing the AFP’s ability to negotiate with the media, including over publication of material. Negus had originally given his statement about the conversation on the understanding that it was in confidence.

Magistrate Mealey agreed with Mr Mukerjea that publication of the contents of the conversation would cause “considerable” embarrassment to Whittaker. Mr Mukerjea argued that embarrassment was not sufficient cause for suppression, and that no convincing evidence had been led that publication of the conversation would threaten national security. He said the case was of great public interest because it showed the AFP being “held to ransom” by The Australian because of the leak.

The legal argument is continuing.

Inspector Appleby was giving evidence on the first day of the committal hearing in the prosecution of former Victorian Detective Senior Constable Simon Artz, who is accused of being the source of the leak to The Australian‘s Cameron Stewart, who won a Quill Award for his scoop.

Evidence this morning concerned relations between media and police, with the former manager of the Victoria Police media unit, Inspector Phillip Shepherd, speaking about this 2008 article in which Stewart quoted Artz. Artz had not sought proper authority to speak to Stewart, and was disciplined over the contact.

Shepherd said police were allowed to have general contact with the media, but any exchange of information about police operations was not allowed without the media unit being involved.