The Court of Appeal has rejected a bid by the corruption watchdog to reinstate corrupt conduct findings against one of the targets of its landmark investigation into the Obeid family's $30 million coal deal.

In July last year former RAMS Home Loans founder John Kinghorn became the first person in more than 20 years to be cleared of corrupt conduct in NSW after the Supreme Court quashed ICAC's finding against him.

ICAC sought to appeal the ruling but later agreed to drop the case after a High Court ruling in April made its findings against Mr Kinghorn and others untenable. That ruling, relating to ICAC's ill-fated attempt to investigate Crown Prosecutor Margaret Cunneen SC, substantially narrowed the scope of ICAC's powers as they had been interpreted by the agency.

However, the NSW Parliament subsequently passed retrospective laws to validate the findings and ICAC sought to revive its appeal.

The Court of Appeal – Chief Justice Tom Bathurst and Justices John Basten and Anthony Meagher – ruled unanimously on Friday that ICAC could not re-enliven its appeal. It ordered the agency to pay Mr Kinghorn's costs.

There was no suggestion ICAC "was acting under any mistake or misapprehension" when it agreed to drop its appeal, the court said, and it was aware at the time that "validating legislation might be forthcoming".

"True it is that the commission has very important functions with respect to the identification of corrupt conduct in NSW," the court said. "However, its agreement to discontinue its appeal with respect to Mr Kinghorn demonstrated, no doubt properly, that there were other interests at stake which constrained the single-minded pursuit of a particular individual."

The "undoubted prejudice to Mr Kinghorn in being again put to the expense, stress and disruption of a lengthy appeal" outweighed ICAC's interest in reinstating its appeal, the court said.

The outcome of the case may produce anomalous results with other targets of ICAC's investigations. Mr Kinghorn and four of his associates  – mining mogul Travers Duncan, lawyers-turned-businessmen John McGuigan and John Atkinson, and investment banker Richard Poole – were found to have acted corruptly by failing to disclose to authorities the Obeids' involvement in a coal tenement.

While Mr Kinghorn was successful in his Supreme Court bid to overturn the corruption finding against him, his associates lost their case. That is because all of the men but Mr Kinghorn were found corrupt on two legal bases, one of which was held to be valid and the other invalid. Mr Kinghorn's finding was made only on the one, invalid, basis.

ICAC is arguing both of those legal bases are valid as it defends a separate Court of Appeal case brought by Mr Duncan and his associates to overturn the findings against them. If it wins both points, the men will be found to be corrupt based on an interpretation of the law that was not applied to Mr Kinghorn.

But the court said this was not a sufficient reason to allow ICAC to re-enliven its appeal and "differential results will frequently occur due to the exigencies of the litigious process".