The accusation was made on Thursday by Graham Mowbray, who issued Australia's first order to restrict a terror suspect's movements.
Mowbray made an interim order at a secret court hearing in Canberra at the weekend that restricts where Australian-born Muslim convert Joseph Thomas can go, and to whom he can talk.
The power to control the movements of suspects who have not been charged is part of new counter-terrorism laws that came into effect in December.
Thomas's lawyers began their efforts to prevent a federal magistrate in Canberra from extending the interim order by up to a year at a preliminary hearing on Thursday.
Mowbray told the hearing that the government's move to have al-Qaeda leader Bin Laden included on a list of 50 people Thomas would be barred from contacting was "almost a bit farcical, and this is a very serious proceeding".
"In my view, it makes the order look somewhat silly in putting the name on the list," he said.
Tom Howe, the government lawyer, agreed to review the list, but backed the inclusion of Bin Laden's name.
Thomas was alleged to have met Bin Laden on three occasions in Afghanistan, he said.
"If I had known the circumstances, I may have reviewed the orders I made"
Magistrate Graham Mowbray
"We couldn't safely presume there is absolutely no possibility of contact," Howe told the court.
Mowbray also criticised how the police interrupted 33-year-old Thomas's vacation with his family on Monday morning to enforce the interim order.
Thomas returned home on Monday. He must remain at home from midnight to 5am and report to Melbourne police three times a week.
"If I had known the circumstances, I may have reviewed the orders I made," Mowbray said.
The preliminary hearing was adjourned and will resume on September 11 in Melbourne.
A Melbourne court in February convicted Thomas of accepting $3,500 and an air ticket to Australia from an al-Qaeda agent in Pakistan, and of having a false passport. He was sentenced to five years in prison.
But he was freed on August 18 when an appeal court ruled that a jury should not have heard some of the evidence that helped convict him.
Thomas said in a television interview that he met Bin Laden on several occasions in Afghanistan and found him "very polite and humble and shy".