Town hall snoopers were dealt a blow today after a landmark ruling against a council that spied on a family to check they were living in the right school catchment area.
Jenny Paton, Tim Joyce and their three daughters were under covert surveillance by Poole Borough Council for three weeks in 2008.
The council claimed it was acting under the Regulation of Investigatory Powers Act (RIPA) to check the family lived in the catchment area where the children went to school.
But the Investigatory Powers Tribunal (IPT) said it was not a proper purpose and nor was it necessary to use the surveillance powers.
It is the first time these powers have been challenged at an open hearing before the IPT.
Corinna Ferguson, legal officer for civil rights group Liberty, said: "Intrusive surveillance is vital to fighting terrorism and serious crime, but weak legal protections and petty abuses of power bring it into disrepute.
"Former ministers claimed that the innocent had nothing to fear but the sinister treatment of Jenny and her kids proves that these powers need to be far more tightly restricted and supervised."
The IPT also found that the surveillance breached the family's right to privacy under Article 8 of the Human Rights Act.
The Government is reviewing the use of RIPA powers by local authorities as part of the Counter Terror Review announced by the Home Secretary last month.
The coalition agreement stated that the Government would limit local authority use of RIPA to "stopping serious crime" and only when approved by a magistrate.
Miss Paton, from Poole, only found out she had been under surveillance when it was revealed during a meeting with council officials to discuss their school application.
They were tailed round the clock, spied on at home and their movements were recorded in detailed surveillance forms. Their car was also described as a "target vehicle".
A Local Government Association (LGA) spokesman said: "Councils need these powers to target serious criminals such as fly tippers, rogue traders and benefit fraudsters but they should also make sure these powers are used proportionally and the public have confidence in them."
The ruling, which was made public today but dated July 29, stated: "The Tribunal have concluded that the surveillance was not proportionate and could not reasonably have been believed to be proportionate."
It added: "The authorisation applied for and granted on February 8 2008 and acted on by the council did not comply with the requirements of RIPA and was invalid; and the complainants have been unlawfully subjected to directed surveillance."
The council argued that the covert surveillance, which took place between February 10 and March 3 2008, was lawful under RIPA for the over-subscribed and successful school.
The council had received two phone calls from members of the public making formal complaints alleging that the family was not living at the property in the catchment area.
The second caller said Miss Paton had boasted about pretending to live in the property. The family also owned two flats in another property out of the catchment area and both addresses were kept under surveillance.
A Borough of Poole spokesman said: "The council accepts fully the ruling of the Investigatory Powers Tribunal and would like to apologise to Ms Paton and her family for any distress caused as a result of its actions in this case.
"As the local education authority, the council has a duty to uphold the integrity of the school admission process.
"The council takes this responsibility very seriously and has always sought to ensure that the process is fair for all families and not open to abuse by those who may seek to exploit the system to the disadvantage of other parents and children."
The council no longer uses RIPA for investigating potentially fraudulent applications for school places following a scrutiny committee review, approved by the cabinet in December 2008.
The tribunal also criticised the fact that the children were made targets of surveillance despite being innocent of any wrongdoing.
It raised concerns that no consideration or allowance was made to prevent this when planning the covert operation which involved an education officer spying on them from a parked car.
He also drove past the two properties looking for their car and to see whether their properties were being used.
No digital camera or recording equipment of any kind was actually used in the surveillance.
John McBride, chief executive of Borough of Poole, said: "We have had plenty of time to think about what was said in the tribunal.
"We are sorry we did it, we stopped doing it nearly two years ago and we fully accept all the findings of the tribunal.
"We really got it wrong on that occasion - not just wrong but really wrong and for that I'm sorry.
"I'm not trying to deflect from that but there are, sadly, some parents who do give false information and we have a responsibility to families in that area to do some checks.
"In this case someone disproportionately triggered surveillance and we should not have done that."
The school in question, Lilliput First School, graded outstanding by Ofsted, has 90 places for the coming reception year and 24 pupils on the waiting list.
Ms Ferguson said: "This case demonstrates the real dangers of delegating intrusive policing powers to bureaucrats who are not best placed to balance privacy and law enforcement. If the law isn't significantly tightened, more abuses, legal cases and crises of public trust will no doubt follow."
Housing Minister Grant Shapps said: "This is an appalling abuse of state powers, and I fear it is just the tip of the iceberg.
"Town halls are not the secret service or the police, but surveillance powers designed to tackle terror and the most serious crimes have been over-used and misused.
"Britain is not a totalitarian state, but we have some laws which are as draconian and arbitrary.
"The new Government will stand up for the privacy and liberty of law-abiding citizens, and change the law to stop the rise of a Town Hall Stasi."
In an interview with Sky, the couple spoke of their relief at the ruling.
Miss Paton said: "Obviously we are delighted and very much relieved that, after a two-and-a-half-year battle, the IPT has upheld our complaint and considers that the 22 days of surveillance that Poole Council put us under was indeed unlawful."
Mr Joyce said: "We felt when we arrived before the IPT that they had some sympathy for our position, but we said it was in no way clear that we would get such a resounding, successful result with no ambiguity at all."
Miss Paton revealed that they brought the case through the IPT in order to "test" the legislation.
She said: "We did not bring it to be exonerated or to claim any compensation for injured feelings. This was really about bringing a case so other people could see just how absurd and insidious this piece of legislation actually is."