Iranian-born Man Horan Monis, a self-styled Sydney cleric also known as Sheik Haron, was charged with 12 counts of using a postal service in an offensive way and one count of using a postal service in a harassing way over three years until 2009. Amirah Droudis was charged with aiding and abetting the offences. They face potential maximum prison sentences of 26 years and 16 years respectively if convicted.
The six judges of the High Court split on whether the charges were compatible with Australians' right to free speech. When the nation's highest court is tied, an appeal is dismissed and the lower court decision stands.
That sends the charges to a lower court where they will be heard on a date to be set.
Monis allegedly wrote letters critical of Australia's military involvement in Afghanistan and condemning the dead soldiers. He also allegedly wrote to the mother of an Australian official killed in a terrorist bomb blast in Jakarta, Indonesia, in 2009 and blamed Australian government foreign policy for the tragedy.
His lawyer David Bennett argued in the High Court last year that the letters were "purely political.'' He argued the charges were invalid because they infringed on Australians' right to freedom of political communication.
The Australian Constitution doesn't include an equivalent of the U.S. First Amendment. But the High Court has held for decades that the constitution contains an implied right to free speech because such political communication is essential to democracy. This right is not as extensive as that guaranteed by the U.S. Constitution.
The pair had appealed in the High Court the unanimous ruling of three judges of the New South Wales state Court of Appeal in December 2011.
"Whilst at one level the letters are critical of the involvement of the Australian military in Afghanistan, they also refer to the deceased soldiers in a denigrating and derogatory fashion,'' their judgment said.
Prof. Anne Twomey, a Sydney University constitutional lawyer, said the High Court's tied decision offered little legal precedent on the extent that offensive speech can be prohibited in Australia.
She said the issues could be tried again in a different case. Two of the seven judges on the High Court will have changed before the next such case is heard.
"It's rather unpredictable'' how the court would rule on a similar case, Twomey said. "The area of offensive speech has always been difficult.''
Only six judges heard the case because the seventh, Justice William Gummow, intended to retire in October last year before the trial was likely to be completely heard.
One of the judges who would have upheld the appeal on free speech grounds, Justice John Dyson Haydon, retires in March.
It is a crime under Australian federal law to use a postal service to communicate a message that "reasonable persons would regard as being, in all the circumstances, menacing, harassing or offensive.''
Twomey said Monis and Droudis might not have been charged if the letters had been hand delivered.
Federal authorities have limited criminal jurisdiction in Australia and relied in this prosecution on its powers over national postal and electronic communications.
Australia has 1,550 troops in Afghanistan which is the biggest military contribution to the war of any country outside NATO. Australia has suffered 39 casualties over the past decade in Afghanistan and another 249 Australian soldiers have been wounded.