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At a press conference Friday, NSW Deputy Police Commissioner, Mick Willing, Head of Counter-Terrorism Command and Special Tactics, read an excerpt from a statement.
He added that the police had received Thursday a "definitive" advice on handwriting found in the notebook, which resulted in the withdrawal of the prosecution.
"The NSW Joint Anti-Terror Team has informed the Director of Commonwealth Criminal Prosecutions that we support the withdrawal of a terrorism charge against an elderly Sri Lankan. 25 years old, "Willing said.
"The decision to lay this charge was motivated by an investigation into one of Mr. Nizamdeen's notebooks found on a desk used by him, as well as the serious threats to persons in this notebook.
"Subsequent forensic expertise of this notebook revealed irregularities between examples of Mr. Nizamdeen's writing and the writing of the notebook specifying the threats of acts of terrorism.
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"As we have more evidence contradicting the original information and documents we have received, we have acted appropriately and informed the court process through the prosecutors."
Mr. Willing stated that the anti-terrorism investigators acted in good faith on the basis of the evidence before them.
"The very nature of this type of offense means that we sometimes have to intervene early.I emphasize that the investigation is ongoing now," Willing said.
When asked if he would apologize to Mr. Nizamdeen, Mr. Willing reiterated that the investigation was ongoing.
Asked that Mr. Nizamdeen's life was ruined, Mr. Willing replied, "I think those who are involved in the production and production of these documents are those who have had an impact on Mr. Nizamdeen."
Mustafa Kheir, Nizamdeen's attorney, said in court Friday that he would seek court costs and act before the NSW Supreme Court.
"What the authorities did to this young man is absolutely unforgivable," Kheir said.
"We will seek justice in the NSW Supreme Court.
"It's a terrible experience, as a young man who did everything right in life, he went through [Goulburn’s] supermax prison in unforgivable circumstances ".
Nizamdeen spent four weeks behind bars before being released on bail on 28 September.
Deputy Commissioner of the Australian Federal Police, Ian McCartney, said the police had acted in good faith throughout the investigation.
"We conducted the investigation expeditiously and in accordance with the law, at all times," said Mr. McCartney.
"At this stage, on the basis of the evidence available to us, it is likely that [Mr Nizamdeen] did not write these comments in the notebook. "
The case will be sent to court in November for a hearing on who should pay the costs of appearing in court.
Georgina Mitchell is a reporter for the Sydney Morning Herald.
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