It is the first time anyone has been charged with criminal nuisance following protected sexual intercourse.
People with HIV or other sexually transmitted diseases are not legally required to disclose their conditions unless it could endanger their partners.
Two charges of criminal nuisance against Dalley were today dismissed in Wellington District Court by Judge Susan Thomas in a reserve decision following a two-day hearing in August.
Dalley's legal duty was to take reasonable precautions to avoid transmitting the virus which he had done by using a condom during intercourse and not ejaculating during oral sex, the judge said.
"The evidence on vaginal intercourse was that the risk of transmission of the virus without using a condom where the male is HIV-positive is relatively low.
"The prosecution put it at 5.7 per cent, the defence at 0.1 per cent."
Condoms were 80 - 85 per cent effective, although they could fail because of a manufacturing defect or user fault, Judge Thomas said.
"The evidence of health experts in the area is that the use of a condom for vaginal intercourse is sufficient for the prevention of the transmission of HIV and that this can be met without the requirement for disclosure."
Although people might expect a sexual partner to inform them of their HIV status, and there could be moral duty to do so, it was not required by law, she said.
Dalley's father Justin Dalley said after the verdict it had been a long and emotional process for the family.
"We are very pleased it's over," he told NZPA.
His son was sentenced the day he discovered he was HIV-positive, Mr Dalley said.
"That in itself was quite hard for the family to come to grips with."
In June Dalley was sentenced to 300 hours' community work for having unprotected sex for four months with his former partner and failing to tell her he was HIV-positive.
HIV-positive Zimbabwean refugee Shingirayi Nyarirangwe was jailed for three years in September 2004 for three charges of assault and four of criminal nuisance after failing to tell four women he had unprotected sex with about his condition.
The New Zealand Aids Foundation welcomed the decision and said common sense had prevailed, and HIV prevention strategies were enhanced.
"Today's decision reinforces what the New Zealand Aids Foundation has been saying for 20 years, that the best strategy for avoiding HIV during anal or vaginal intercourse is the consistent and proper use of condoms, " executive director Rachael Le Mesurier said.
"Relying on HIV-positive people to tell you, and assuming that unprotected intercourse is safe if HIV is not mentioned, is a much riskier strategy, especially as approximately one third of people with HIV in New Zealand don't know they have it, and so can't tell."
Ms Le Mesurier said they were pleased that the decision highlighted it was condoms, not disclosure, that kept people safe.