A prestigious Sydney private school has failed to overturn the rejection of its expansion plans due to the "unsafe and risky" behaviour of parents.

Scots College launched a court challenge last year after Woollahra Council failed to approve its plans to convert a $4.8 million Bellevue Hill house into an 80-student early learning centre for its preparatory school.

The NSW Land and Environment Court upheld the council's refusal – not on the grounds set out by the council, but due to concerns about the behaviour of the school's parents when dropping off or collecting their children.

Senior Commissioner Tim Moore concluded that he could not be satisfied there would be no increased safety risk to pedestrians, particularly to young children, "given the present dangerous parental activities", if the application was approved.

"A significant number of parents dropping off and/or picking up children from the preparatory school pay no regard to the law, child safety or the instructions given by the preparatory school," said the judgment, which based its assessment on evidence from nearby residents, including photos, and the preparatory school's "own limited traffic survey".

The school appealed Commissioner Moore's decision, but that bid was dismissed this week.

Justice Nicola Pain found there had been no breach of procedural fairness or a failure to assess the likely impact of the development.

Scots had not demonstrated that there would be no overall increased traffic risk as a result of the Kambala Road proposal, Justice Pain noted.

"The Appellant did not even conduct a basic survey of parents to see whether their drop-off and pick-up behaviour would change as a result of the proposed development," the judgment said.

Paul Blanket, the spokesman for residents' group, Concerned Scots Neighbours, said the decision "should act as a wake-up call to Scots that no-change is not a fix to an intolerably dangerous traffic situation".

"Wouldn't it be money far better spent actually improving the safety of the children rather than debating it as a legal point in the Land and Environment Court?" Mr Blanket said.

Scots College principal Ian Lambert said the judgment was "extremely disappointing on a number of levels" and the school would consider it carefully before making any decisions.

"In practical terms, this decision means that the current situation continues without the prospect of the improvements to safety and amenity we had desired," he said.

Dr Lambert, who said "it is clear that there would be no additional risk" as a result of the proposal, criticised the council and residents' group.

"In pursuing the status quo they have once again stalled the improvement of the Municipality," he said.