A panel of three Court of Appeal justices upheld the 2024 Victorian Supreme Court ruling on Monday, unanimously refusing race organisers' bid to appeal.
The Formula One event at Melbourne's Albert Park in 2020 was axed hours before gates opened on the Friday due to the looming threat of COVID-19.
Williams, whose discography includes Let Me Entertain You and Angels, was to perform at Lakeside Stadium the following day as part of the event, but his concert was also cancelled.
Live music promoter World Touring Melbourne successfully sued Grand Prix organisers in 2024 over a breach of contract, claiming the concert was axed because the corporation provided misleading information about government health advice.
Justice Clyde Croft in 2024 ruled event organisers had deceived promoters by claiming Victoria's then chief health officer Brett Sutton had directed the March 14 concert should not go ahead as planned, when no such advice had been given.
Organisers had sent an email to World Touring Melbourne at 4.25pm on March 13, stating Dr Sutton had advised the Grand Prix needed to be cancelled or run patron-free.
But the former CHO had actually texted Grand Prix officials earlier that day to say while he supported the decision to cancel the Williams concert, it was ultimately up to the organisers.
The judge ordered the Australian Grand Prix Corporation to pay $2.84 million in damages to World Touring Melbourne for loss of earnings.
Appeal justices Kevin Lyons, Jack Forrest and Rowena Orr rejected the Grand Prix's all nine grounds of appeal.
Among those include the trial judge made an error when he found WTM relied on the corporation's representations and failed to address the Grand Prix's case.
Court House Capital, which financially backed the music promoter's litigation, highlighted the prohibitive nature of a business suing a government corporation with taxpayer-funded lawyers for years.
"Today's judgment is an outstanding result for World Touring Melbourne and a complete vindication of the position it has maintained throughout these proceedings," Chief Investment Officer Heather Collins said.
An Australian Grand Prix Corporation spokesman acknowledged the appeal court's decision.
Other events, including National Rugby League fixtures and a concert at Melbourne's Sidney Myer Music Bowl, continued to take place that weekend.