Allan and Chris Jones set up the camping ground on a 1.22ha site on the south side of the Kakanui River, but have fought the Waitaki District Council over whether it was legal or needed resource consent.
The court has now declined resource consent, leaving its future in limbo.
It "took no pleasure" in doing that.
"The motor camp-camping ground ... appears to provide a needed facility in the small beach settlement of Kakanui. It appeared to us that the wider community (including the travelling public) would be the losers should it be forced to close," the court said.
Yesterday, Mr Jones said he could neither comment nor make any decisions on the future of the camping ground, because he had not seen the decision.
Council planning manager David Campbell said the court's decision meant the camping ground could only legally operate under the district plan with up to five visitors at any time.
The council would monitor the site to ensure it complied with the district plan.
In its final decision, the court said Mr Jones could pursue resource consent for the camping ground with vehicular access off Waianakarua Rd - the existing entrance - if he wished to do so.
Access was the stumbling block to granting consent.
In 2006, the council granted resource consent for the camping ground, cabins, 30 powered and unpowered tent and caravan sites, and landscaping.
A condition was that access be from Harbour Tce, not Waianakarua Rd, and Mr Jones pay for widening River Rd and upgrading the River Rd-Harbour Tce intersection because of safety issues.
That approval was appealed to the Environment Court by Mr Jones and four other people.
In an interim decision in March, the court indicated it could not issue a resource consent for the camping ground and gave Mr Jones and the council 40 days to reach an agreement to build a new access and upgrade the intersections at Waianakarua Rd-Harbour Tce and Harbour Tce-River Rd.
While the present level of traffic at the intersections was low and upgrading them was very low on the council's roading priorities, the camping ground would increase the danger.
However, the council could not offer any firm commitment to undertake the work, even though the court had made clear it needed to be done before the camping ground could proceed.
The court said Mr Jones' wish had consistently been access from Waianakarua Rd.
However, the court could not consider that option because it would affect other people who may want to object to the proposal.
