Giggle for Girls app founder Sall Grover appealed against a 2024 decision finding Roxanne Tickle suffered indirect discrimination and ordered Ms Grover to pay $10,000 in compensation and legal costs.
It was the first time the Federal Court had weighed into gender identity discrimination.
On Friday, a panel of three Federal Court judges largely upheld the primary ruling, but added the actions of Ms Grover and the app were not just "indirect" but "direct" discrimination.Â
Therefore, the court reassessed damages owed to Ms Tickle to be $20,000 - double the initial award.
"Giggle and Ms Grover both excluded Ms Tickle from the Giggle app and refused to readmit her on the basis of her gender-related appearance by reference to her selfie," Justice Melissa Perry told the court.
"This amounted to direct discrimination by reference to a characteristic that pertains to people of Ms Tickle's gender identity."
The app and Ms Grover were also ordered to pay Ms Tickle's legal costs up to a maximum of $100,000.
The decision on damages took into account aggravating conduct by Ms Grover, which included repeatedly misgendering Ms Tickle in media interviews and online.
The judgment described some of Ms Grover's conduct as "gratuitous, disrespectful and unnecessary to the conduct of her case".
Following the ruling, a tearful Ms Tickle hugged supporters, while some of those backing Ms Grover muttered expletives as they left the courtroom.
Equality Australia legal director Heather Corkhill called the decision a huge win for transgender people and all Australians.
"For decades, Australian laws have recognised that a person's legal sex is not fixed based on what was designated to them at birth," she told media outside court.
"Any other interpretation would deny the very existence of trans people.
"This has been unanimously affirmed today by the court."
Ms Tickle said she hopes the decision helps transgender and gender diverse people and their loved ones to heal.
"There is so much hate and bile cast on trans and gender diverse people, simply because of who we are," she said.
"I brought my case to show trans people you can be brave and that you can stand up for yourself."
Ms Grover dodged media outside the courtroom, but told Sky News on Thursday if her appeal was unsuccessful she would take the fight to the High Court.
Ms Tickle was blocked from the Giggle app in September 2021 on the basis of her gender despite a birth certificate listing her as female, the court was told during a series of often-heated hearings in April 2024.
Giggle's barrister Bridie Nolan claimed Ms Tickle was a man so it was lawful to exclude her from the app because of provisions in the Sex Discrimination Act.
But Ms Tickle had undergone gender-affirming surgery and hormone treatments, identified as a woman with her family, friends and at work, and used women's change rooms and shops in women's clothing departments, her lawyer Georgina Costello said.
During an appeal hearing in August, lawyers for the app argued it was a "special measure" exempt from discrimination law because it sought to achieve substantial equality between men and women.
Its intention was to create a "safe space" for women, Ms Grover's lawyers said.
But this was challenged by lawyers from the Sex Discrimination Commissioner, who argued "invidious discrimination" could be permitted to take place under the guise of a special measure.
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