The ruling comes after a four-year battle by the No Dump Residents Association Inc, mainly comprising Auburn and Clyde residents, to stop Collex using the Clyde railway yards for its waste transfer terminal.

Waste is brought from various parts of Sydney to the terminal, packed into containers, and transported by rail to Crisps Creek near Tarago. From here it is trucked to the nearby bioreactor, a facility able to accept up to 400,000 tonnes of putrescible waste each year.

Justice Talbot agreed with the company's argument that Collex enjoyed existing use rights at the yards, under the Environmental Planning and Assessment Act, and dismissed the case.

The yards have been used as marshalling yards since 1892. They are currently under Pacific National's control.

Spokesperson, Paul Zagami, said Collex was pleased to clear "another legal hurdle."

"It is a relief to have overcome this latest series of legal technicalities about issues and operations which are delivering a positive benefit for the environment," Mr Zagami said.

"The transport of waste by rail to Woodlawn is removing and reducing the running distances of up to 60,000 waste truck movements on Sydney's roads.

"If this latest appeal had succeeded, it could have consequently led to these truck movements being returned to Sydney's roads."

The residents don't quite see it the same way. Spokesperson John Drake said the issue was the "operation of an environmentally unfriendly waste transfer terminal."

"The court has found today that Collex could continue to harm the environment around Auburn, Clyde and Granville, and create a monopoly in Sydney for a French multinational waste company," Mr Drake said.

"Jobs will be lost in the transport and waste industries as the tentacles of Collex squeeze their opposition into non-existence."

He believed that the group had scored a partial victory in that Collex basically conceded that it lost its original case for existing use rights under section 109 of the EP&A Act. Instead, in the second part of the case earlier this month, it relied on section 107 of the Act.

Mr Drake said on this basis, it would be very difficult for Collex to claim legal costs against the group. Justice Talbot reserved a decision on costs at Tuesday's hearing. Yesterday, Mr Drake said his group did not expect the decision and he was still "numb." "We managed to overturn the government's original consent and the Clyde Act (special State Government legislation introduced in late 2003), which were momentous," Mr Drake said. He did not rule out pursuing the case in the Land and Environment Court or the Supreme Court.

He also declined to say how much had been spent on the case. The cases have been often described as a David and Goliath battle with Mr Drake and another resident, Allan Brzoson principally arguing in court against Collex's team of Queen's Counsels and Senior Counsels.