A Federal Court judge in Ottawa has overturned an Immigration and Refugee Board appeal decision in the case of a former Russian translator accused of spying on a Canadian disarmament project more than two decades ago.

Early last month, the court heard arguments in the extraordinary case of Elena Crenna and her husband David.

She was deemed inadmissible to Canada by an immigration adjudicator who sided with a Canadian Border Agency assessment which concluded she helped the Russian security service spy on the housing project in the mid-1990s.

In a decision released Monday, Justice Henry Brown ordered the case returned to the refugee board for redetermination.

He found the actions of Elena Crenna in the mid-1990s were not "secret, clandestine, surreptitious or covert" because they were carried out with the full knowledge, consent and encouragement of her future husband.

David Crenna was in charge of a Canada Mortgage and Housing Corporation-sponsored project in Tver, a city northwest of Moscow. His future wife acted as a translator when she was approached by the Russian security service, the FSB, which wanted to know what was going on with the program — and Crenna gave her permission.

Former federal public servant David Crenna says he's still baffled by federal claims that his wife Elena spied for the Russians in the 1990s. (Murray Brewster/CBC)

A former KGB defector wrote a book in which he claimed — without naming David or Elena Crenna — that the Canadian effort to help build homes for demobilized former Red Army soldiers had been penetrated by Russian intelligence and that the program director had been swept up in a "honey trap" espionage scheme.

When Elena Crenna applied for permanent resident status in Canada after marrying her former boss, she was interviewed by the Canadian Security Intelligence Service and the FBI. Neither agency expressed any concerns.

It was the Canada Border Service Agency that helped to convince the refugee appeal board that she should be denied residency, describing her as a sex spy.

Brown dismissed that notion and pointed out that the allegations in the book by the KGB defector had been rejected by senior immigration officials.

The judge said that whatever Elena Crenna "disclosed to the FSB she disclosed as a result of instructions issued by her superior, Mr. Crenna," and that "her acts were done with the knowledge and consent of the Canadian in charge."

Her actions in answering FSB questions don't even meet the definition of "espionage," Brown wrote.

In their arguments, federal lawyers claimed that David Crenna had no authority to allow his future wife to speak with Russian intelligence.

The judge disagreed and said that, as co-director the project and field manager, Crenna was in charge and had "the authority to give her instructions."

On Monday, David Crenna welcomed the decision and described it as "a pointed rejection" of the border service agency's claims.

Wesley Wark, a University of Ottawa professor and one of the country's leading experts on intelligence, said the federal government's pursuit of the case has wasted taxpayers' money and bureaucrats' time that could have been put to more serious cases and threats.

"It's a mystery to me why they chose to do this," said Wark.

The fact that the judge had to remind federal lawyers of the definition of espionage, he said, spoke volumes about how border officials and the immigration appeal adjudicator handled the case.

"I think they made some terrible errors in judgment," said Wark.