The 7-year-old has had to wear a muzzle in public since he was classified as a menacing dog after biting a bichon frise/Jack Russell, Alfie, on Marine Parade on March 25.
The decision by a three-man panel of the Queenstown Lakes District Council’s dog control committee follows an appeal hearing two weeks ago at which Happy’s owner, busker Kim Turton, pleaded for the order to be overturned.
Happy became a "normal dog" after being neutered, and he was confident he would not attack another dog while on a leash.
The muzzle made onlookers wary and his income had fallen by about a half, he claimed.
However, a report by the council’s animal control team said Happy was not on a leash when he bit Alfie.
His "history of dog-on-dog attacks" had led to six previous complaints, an infringement notice and a written warning.
Animal control team leader Carrie Edgerton told the panel the classification was the next step after education and infringements had failed.
In this week’s decision, Cr Ferguson said it was apparent Happy was "nervous of other dogs coming into his space".
"Assuming Happy had been on a lead at the time of the incident ... it would seem [Mr Turton’s] stated trust in Happy not reoffending if on a lead is misplaced."
Mr Turton could not be reached for comment.
