The court was told every parent's worst nightmare occurred when nursery staff suffered "a momentary lapse in concentration".
The little boy was to join other children in the Herbert Street creche for an outing to St Stephen's Green -- but instead was left behind.
He got up on a chair, opened the door and began wandering from the Merrion Montessori and Nursery.
The boy was discovered by gardai half an hour later wandering alone on Wilton Place -- meaning he crossed busy Lower Baggot Street and walked in close proximity to the Grand Canal to get there.
The Merrion Montessori and Nursery at Herbert Street has since closed.
The HSE took a case against creche owner Sarisha Kelly, who then owned the creche, after the incident. This week, a judge cleared Ms Kelly of negligence.
The pre-school boy was forgotten by creche staff who were bringing 17 children on an outing to St Stephen's Green on July 13, 2010. When staff did a head-count on the way to the Green they discovered they only had 16 children.
It was then found that the missing boy had let himself out of the basement creche on Herbert Street and the alarm was raised. Gardai found the boy around 250 metres away after he had walked up Herbert Street, across Lower Baggot Street, and along the canal to Wilton Place.
Apart from the traffic hazards involved, there is also an exposed canal lock beside Wilton Place.
The Herbert Street creche has now closed, and staff at a separate premises on Merrion Square have said the business is in new ownership and Sarisha Kelly is not involved anymore.
The HSE had brought the case against Kelly, of Washington Park in Rathfarnham, and the then-owner of Merrion Montessori and Nursery.
It was alleged Ms Kelly failed to take all reasonable measures to safeguard the health, safety and welfare of a pre-school child on July 13, 2010.
It was also alleged that she failed to take all reasonable measures to safeguard the health and safety of pre-school children attending the pre-school, and in particular she failed to ensure operational procedures for the safe conducting of outings were in place.
But judge Anthony Halpin dismissed all charges against the creche owner at Blanchardstown District Court. He said the behaviour of the HSE in the case was "nothing short of disgraceful", and Kelly's employees were subjected to "Gestapo-like interrogation" by the HSE inspectors.
Judge Halpin said he was satisfied the montessori took reasonable care of the child and he fully accepted the accused was not conscious or aware a child had been left behind. He said the minders suffered a momentary loss of concentration, which was bound to happen on occasion, and it was unfortunate a child was lost sight of.
The court heard that the child had let himself out of the nursery, as a chair had been pulled over to the front door.
At 11.20am on July 13, 2010, gardai were informed the child was missing. Gardai contacted Ms Kelly a short time later to say the child had been found, unharmed.
In his ruling, Judge Halpin said the HSE intended to give the impression to staff it was an "obligatory" interview.
The judge also said he was satisfied the manner of the interviews was "oppressive, cruel and overwhelming".
He dismissed all summonses against Kelly, saying the behaviour of the HSE in the case was "nothing short of disgraceful".
Judge Halpin also awarded costs against the HSE.