A BID by Gunns to force the Tasmanian Conservation Trust to pay a security bond before proceeding with legal action against the company has failed for the second time.

Gunns was also ordered to pay the trust's costs relating to the appeal, estimated to be $7000-$10,000.

The Tasmanian Conservation Trust is seeking a court determination that the permit for the proposed Tamar Valley pulp mill had lapsed because Gunns had failed to meet the permit condition that the project be substantially commenced by the end of August last year.

In the Supreme Court in Hobart yesterday, Justice Alan Blow dismissed Gunns' appeal against Associate Justice Stephen Holt's decision that the trust not be required to pay the bond to the court to help pay Gunns' costs should the trust lose the case.

Justice Blow also refused Gunns' request that the company pay the trust's appeal costs at the end of the litigation.

``Given the total failure of the appeal and the likely delay before this matter's resolved, it's appropriate that there is no obstacle to the successful respondent taxing its costs and enforcing the court order,'' he said.

During the appeal hearing late last month, the trust's lawyer, Stephen Estcourt QC said that such an order would stultify the action.

Outside the court yesterday, Tasmanian Conservation Trust director Peter McGlone said that he was excited and relieved by Justice Blow's decision.

``We hope that the case will now proceed toward a trial at the earliest possible date and have asked our lawyers to proceed with preparing the case for trial,'' he said.

Gunns has 21 days to appeal against yesterday's decision.

If an appeal is filed, it will be heard by the full bench of the Supreme Court.