The case involving Col. Bernard Ouellette was dismissed Monday, but details were only made public Thursday with the presiding judge noting the officer's claims were still before the military's grievance board.
Justice Timothy Ray also said the case did not meet the legal test for slander.
Ouellette was dismissed from his command in Haiti almost three years ago following allegations of an inappropriate relationship with a woman who worked for the United Nations.
He took the extraordinary step of suing National Defence and fellow officers for defamation after the department confirmed his dismissal to news media and stated the long-serving officer was being investigated.
Members of the military deployed overseas are required to follow a strict non-fraternization code.
Ouellette, who is married, alleged that fellow officers on the Haiti mission emailed superiors in Ottawa in March 2010 to accuse him of sleeping with a UN staffer and that they had been seen "frolicking together" by the pool.
The woman, Vlora Merlaku, was his secretary at the UN headquarters in Port au Prince.
"It is a fact that she (Vlora) is sleeping in the same room with Col. Ouellette and that there is only one bed in the room," said one email submitted as evidence by Ouellette.
The note was allegedly sent by a Canadian major serving with the UN force and went on to say: "They have been seen walking hand in hand, not normal behaviour for a boss and his subordinate."
Ouellette denied any wrongdoing and said he gave Merlaku his room at the Canadian embassy residence for two months following the devastating earthquake that struck Haiti.
He said he slept elsewhere and he allowed her to remain for health and safety reasons.
Ouellette's ouster came in late June 2010 just weeks after Brig.-Gen. Dan Menard was relieved of command in Kandahar and sent home for having an inappropriate relationship with one of his subordinates.
Ouellette, in his statement of claim, said National Defence bears responsibility because it wrongly removed him from command and created the impression that he'd done something wrong.
"DND is responsible for allowing the propagation of libel inside DND and ultimately allowing it to be released and disseminated by the press," said his statement of claim filed last June.
In his decision, Justice Ray noted that Ouellette had not sued any media outlets and still retained the possibility of being compensated once his internal grievance is reviewed by Defence Minister Peter MacKay.