The decision from the court stated the city acted "in good faith" when it awarded the sole-sourced $300-million contract to the Ottawa Sports and Entertainment Group in June 2010.
The Friends of Lansdowne coalition accused the city of breaking its own procurement rules with the decision. FOL's challenge pushed back the construction timeline for Lansdowne, which was originally supposed to begin in May. The most likely time is now sometime in the fall.
"This project has had unprecedented transparency and extensive public consultation," the city said in a statement.
"The ruling confirms that staff presentations to council and the public never underestimated the city's contribution, and council has always had an accurate presentation of the expected financial results of the partnership plan and the expected return of the city."
In a statement, FOL said it would review the findings with its lawyers.
"The project has not received necessary heritage, environmental and site plan approvals. These will take many months and may require significant changes to the current plan," the group said in a release.
"Moreover, city council has not yet given final approval to the project nor has it rectified the major financial discrepancies in earlier documents that may mean that taxpayers will have to spend tens of millions more on the project."
The city pledges to spend $129.3 million on fixing up Frank Clair Stadium and an underground parking garage, while OSEG will put in $118 million on the parking garage and retail.
FOL released a report in January claiming the city had underestimated the cost of the project, saying it would need to spend as much as $208 million.
However, FOL did not include increased property-tax revenue from redevelopment while calculating that figure, drawing concern from city officials.
Separately, Lansdowne's redevelopment also passed Ontario Municipal Board muster last month following a mediated settlement with nine community groups in April.
A number of changes were made in the mediation, including reducing the height of some towers, removing units and adding a public open space.
City council agreed to speed up Bank Street's reconstruction and provide $300,000 with OSEG to the Glebe BIA. OSEG and the city will also provide $30,000 to community groups in compensation for construction.