The case - involving 70-year-old sequoia and oak trees planted near a property boundary - was up for judicial review before Justice Gerald Nation in Dunedin last month.
It has proved expensive for the Clutha District Council, costing more than $40,000 in legal fees to date.
Justice Nation released a written decision about the trees on Thursday.
Clutha Mayor Bryan Cadogan said the council had been ''vindicated'', and had acted appropriately.
It had a responsibility to ratepayers to seek costs.
''What is frustrating is that the deflection of council resources, at a time when so many positive projects need our attention, is something we are unable to recover.''
In July, the council made the decision to remove the sequoia and oak trees following concerns raised by the neighbours about safety issues during extreme weather conditions.
The trees were 30m and 18m high respectively.
The decision was challenged by members of the public, and Balclutha resident Maxine Evans sought an injunction to stop the trees being felled and a judicial review.
The council had had no choice but to seek the best representation it could, Mr Cadogan said.
Mrs Evans said she was ''very disappointed'' by Justice Nation's decision and intended to try to get more trees in the district registered on the council's list of protected trees.
''My plan is to make sure there are some trees around Balclutha that have got some better protection.''
Justice Nation stated in his written decision the actual decision was not under review, but the decision-making process was.
The trees will be removed and the council will instead plant to the south of the reserve some pin oaks and Acer freemanii maples, which will grow to between 3m and 5m high when mature.
