EXTORTION charges against two teenage children of a prominent Sydney barrister were dismissed in court yesterday.

The boy and girl allegedly used a "pornographic photo" to blackmail a wealthy north shore mother, demanding the woman leave $15,000 in a toilet cistern at a Hunters Hill hotel or they would make the photo public.

In Hornsby Children's Court, charges of extortion against both and other related charges against the boy were dismissed.

The boy must seek counselling and take medications if directed.

The girl admitted to a charge of being a minor in a bar, but no conviction was recorded and the matter was dismissed.

The pair was arrested after the woman's husband reported the demand to police and a covert operation was set up.

The girl was arrested on May 30 after she walked out of the unisex toilet of the hotel's gaming room empty handed. The boy, who police allege was nearby, was arrested some weeks later.

An 18-year-old accomplice was sentenced to a suspended one-year jail term in September.

He pleaded guilty to extortion and had agreed to give evidence against the pair.

Police are unsure how the pair allegedly obtained the photo, taken by the woman's husband. They believe the teens were in the same social set as the victim's daughter, and that the images were stolen from the woman's home.

A copy of the extortion letter received by the victim on May 29 was allegedly found on a laptop used by the siblings.

The letter was allegedly saved in a file titled "threat letter MILF" less than five hours before a copy was allegedly slid under the front door of the victim's home in an envelope addressed to the victim and labelled "private".

In the minutes following the girl's arrest, police allege her brother made 12 phone calls and sent two text messages to their father.

The court heart about an hour later the woman's husband received a call: "You used undercover cops, f ... you, f ... you. You tell (name of woman) she is dead."