The New Zealand Qualifications Authority has failed to prove criminal charges against a now-defunct tertiary institute and its owner.
The authority brought the case in 2018 after finding the International College of New Zealand had passed students who should have failed.
It prosecuted the college and its owner, Chirag Solanki, over 21 instances in 2017 where students were given a grade that moderators said their work did not merit.
In her ruling, Judge Carolyn Henwood said the authority failed to prove who entered the results and that they had knowingly falsified them.
The institute's tutors might have been incompetent but there was no evidence they entered the false results, she said.
"It is completely unknown who entered the results that are the subject of this prosecution," Henwood said.
The court heard that NZQA moderators decided students received achieved grades for work that showed evidence of poor English, and where assessors had provided students with too much help.
A statement to RNZ from Solanki's lawyer, Shane Elliott, said the prosecution had taken an enormous toll on Solanki and his family, and had destroyed his business.
Elliot said the college and Solanki had only ever acted with the best interests of students at heart.
He said their position was vindicated by the dismissal of charges and the court had found that ICNZ and Solanki did nothing wrong.
NZQA cancelled the registration of the college and launched criminal proceedings in 2018. Its chief executive Grant Klinkum said it was disappointing the charges were dismissed.
Despite the outcome, NZQA was pleased the court acknowledged that the acts constituting the offences did occur and that ICNZ was in disarray, Klinkum said.
"In one example, the court accepted that, of a sample of 59 student assessments awarded 'Achieved' grades by ICNZ, 56 should have been awarded 'Not Achieved', a failure rate of 95 percent," he said.
NZQA submitted that ICNZ's poor assessment practices were so systemic and widespread that any individuals at ICNZ must have known or been reckless as to whether assessment results were false.