The Court ruled in favour of the company's subsidiary, New Acland Coal Pty Ltd, on the matter of groundwater and that the original Land Court recommendation was infected by apprehension of bias.
The Court of Appeal ruled the Land Court did not have the power to consider groundwater impacts from mining.
The Court of Appeal also ruled on technical grounds that the legal mechanism for assessing groundwater impacts of mining should be via the water licencing process rather than the grant of an environmental authority.
Final orders will be handed down by the Court of Appeal in due course, however the company is still in a legal holding pattern and is still waiting for the Queensland government to rule on its pending water licence for the project.
As a result of the Court of Appeal decision, the two previous Land Court decisions have also been set aside on other grounds, and the case will have to be re-heard in its entirety.
"The company is pleased with the outcome and will wait for the Court to make its final orders before assessing the next steps for the New Acland Stage 3 project," New Hope said.
"New Hope remains committed to delivering the New Acland Stage 3 project in a timely manner to ensure continuity of operations and ongoing employment in the region."
Local farmers have called for the Queensland government to refuse a groundwater licence for the Acland Stage 3 coal expansion.
Oakey Coal Action Alliance secretary Paul King said the project should never have been allowed to proceed due to the harm it would inflict on local farmers, the environment, and the Oakey economy.
"This is a very difficult outcome for local farmers who have lived with this threat for ten long years and now face more uncertainty due to this technicality, while they struggle with a worsening drought and reduced groundwater supply," he said.
"The farming land around Oakey is classed in the top 1.5% in Queensland. It is madness that it should be destroyed for the sake of a temporary coal mine.
"We urge the Queensland government to stand firm and not approve an associated water licence for the Stage 3 expansion."
New Hope claims Queensland Premier Annastacia Palaszczuk has ignored calls to save 150 jobs at New Acland mine..
"The government's deliberate silence regarding the future of New Acland Mine Stage 3, has forced New Hope Group to initiate the redundancy process, with 150 workers out of a job before Christmas," it said.
"Despite ongoing efforts to meet with the Premier, New Hope Group is yet to receive any indication from the Palaszczuk Government regarding the future of the mine and its application for: Stage 3 Mining Leases; an Associated Water Licence; and Approval to continue using the Jondaryan Rail Facility."
New Hope claims it advised the state government in June approvals were needed by September 1 in order to provide continuity of operations from Stage 2 to Stage 3 and prevent 150 job losses.
"The government's silence on the approvals forced New Hope Group to initiate the redundancy process on September 2," it said.
New Hope Group chief development officer Ben Armitage said "the state government's decision to hide behind the Court of Appeals is weak and disrespectful to the judiciary".
"It is also technically incorrect," he said.
"The state government can absolutely make a decision on NAC Stage 3 at any time. They are in no way legally constrained by the Court of Appeals.
"Queenslanders expect its leaders to make decisions, not excuses."
New Acland Coal - Coal Handling and Preparation Plant Manager Andy Scouller said if NAC Stage 3 does not go ahead, it will be "catastrophic for the region".
"The overwhelming majority want NAC Stage 3 to go ahead, including many farmers who rely on their income from the mine to feed their families," he said.
"Only two weeks ago the Premier said my job was a good, decent job, I guess she didn't mean it."