A majority decision, delivered by Court of Appeal president Sir Ivor Richardson, in response to an appeal by Christian organisation Living Word Distributors, refers the issue to the board for reassessment.
The court gives strong direction to the board, recommending to it, a House of Lords finding that, "The free flow of information and ideas informs political debate. It is a safety valve ... it acts as a brake on the abuse of power by public officials. It facilitates the exposure of errors in the governance and administration of justice."
It also cites a European Court of Human Rights finding that, "Freedom of expression constitutes one of the essential foundations of a [democratic] society".
Without pluralism, tolerance and broadmindedness, that finding says, "there is no democratic society".
Justice Thomas's minority decision agrees with the quashing, but would not remit the matter back to the board for reassessment.
The video, Aids: What You Haven't Been Told, links Aids with homosexuality, claiming that homosexuals have "infiltrated" key public health positions in an attempt to use the epidemic to make homosexuality "respectable".
The video, Gay Rights/Special Rights: Inside the Homosexual Agenda, expresses strong opposition to homosexuals beings granted the benefit of the affirmative protection in the United State's Civil Rights Act.
At first cleared for audiences aged 16 and over, an appeal by the Human Rights Action Group led to the restriction being lifted to 18-year-olds. That group then sought and won from the board a ban on the videos as "objectionable".
An appeal against this decision by Living Word Distributors was lost at the High Court.
The Court of Appeal said the High Court erred in several respects, including in applying conditions of the Films, Videos and Publications Act that pointed to activity, rather than the expression of opinion or attitude.
It had erred in concluding that provisions of the Human Rights Act justified including sexual orientation, race and gender within the classification act's test for when a publication was objectionable.
The court found that, where there were two tenable meanings, the one that was most in harmony with the Bill of Rights must be adopted. It was incorrect to place a greater emphasis on a Bill of Rights provision guaranteeing freedom from discrimination than on another provision, guaranteeing freedom of expression.
"It follows that both the High Court and the Board misdirected themselves in law as to the impact of the Bill of Rights in this case."