Federal Court Justice McKerracher said Mr Zentai was not eligible for extradition, and referred to his health conditions, the unreliability of the allegations against him, the difficulty in obtaining a conviction, and the fact that he hadn't actually been formally accused or charged with a crime.
He also referred to the fact that there was no such thing as a 'war crime' in Hungarian law in 1944.
It was November last year when Brendan O'Connor took time out from the Oceanic Viking crisis to approve Mr Zentai's extradition, resulting in him going to prison for a short time.
But before considering the Australian Government's role, we need to look at the allegations.
In 1944, Karoly Zentai was in a Hungarian transport unit in Budapest. The Soviet Army was driving across Hungary, crushing German resistance. By November, the Soviets were in the suburbs of the capital.
The transport unit was ordered out of the city, possibly as a means to save Hungarian troops, their families and their equipment from obliteration.
Some Jews were being held at the barracks where Mr Zentai was stationed, apparently the lucky ones who'd managed to escape deportation to Auschwitz and other camps.
One of them was Peter Balazs. The allegation is that the 18-year-old was pulled off a tram and taken to the barracks on November 8, where he was detained and then beaten to death. His body was thrown into The Danube.
There have been some suggestions that Peter Balazs was involved in some resistance activities prior to his final arrest. It has been alleged that Karoly Zentai was the one who took him from the tram, before joining in the murder.
After the war, the regime in Hungary set about charging and convicting those who'd persecuted or killed Jewish people. Two of Mr Zentai's comrades, Bela Mader and Lajos Nagy were convicted in relation to the murder of Peter Balazs, and received heavy sentences.
Mader got life imprisonment, and Nagy copped a death sentence, although both were reportedly released after some years in custody. It's widely believed that both men are now deceased.
The Simon Wiesenthal Centre says it was during Nagy's trial in particular that Zentai's name was pressed as a third man involved in the crime.
Statements from Mader and Nagy reportedly prompted the Hungarian authorities in 1948 to ask for Zentai - then in the American zone in Germany - to be sent back. There were statements from others who also implicated Mr Zentai but some said they "heard" he was involved.
It's not known why Mr Zentai was not extradited to Hungary then.
By this time, some insurmountable political differences had emerged in Europe. Yet certainly there was little reluctance on the part of The Allies to punish Germans or Nazi affiliates who'd murdered civilians. The Allies had established legal mechanisms with the aim of bringing war criminals (a new concept in law) to justice.
There's no evidence that Mr Zentai knew of the request from Hungary, or of the accusations against him. Mr Zentai moved to Australia and raised a family, working as a mental health nurse and being active in the Catholic Church. He changed his first name from Karoly to the anglicised Charles and lived at various addresses in Perth.
Peter Balazs's father, Dezso, had collected the material which said to him that Mr Zentai should at least be questioned over the incident. He believed that someone had gotten away with his son's murder.
After Dezso Balazs died, Peter's surviving brother Adam discovered the material and it eventually found its way to the Simon Wiesenthal Centre, which had launched Operation Last Chance in Hungary in July, 2004.
Doctor Efraim Zuroff alerted the Hungarian and Australian governments - he also alerted Channel Nine News. A camera crew was deployed to Mr Zentai's home in Perth.
Mr Zentai denied killing Peter Balazs, and said he didn't even know him. He said he was prepared to go to Hungary to clear his name.
Mr Zentai wouldn't speak to the media again for some time, but the message from his lawyer was that he said he'd left Budapest on November 7, the day before the murder of Peter Balazs.
He soon changed his mind about going back to Hungary, fearing he wouldn't get fair treatment. He also said, through his family, that stress had caused his health to take a downturn. Dr Zuroff said Mr Zentai sounded like a man who had something to hide.
Hungary's Military Tribunal issued an international arrest warrant in 2005.
It is interesting to note how many people automatically assumed he was guilty. There was no presumption of innocence on the part of many observers. After all, if he didn't have something to hide, why couldn't he go back to Hungary and deal with the allegations there?
What surely coloured perceptions was the abhorrent nature of the crime itself. There's little doubt whatsoever that Peter Balazs was Jewish, and that he was murdered by Hungarian soldiers. Their thuggish bullying was a desperately vile act of misguided 'revenge' preceding the fall of Budapest.
The short-hand reporting, and website headlining of the case described Mr Zentai as an "alleged Nazi", even though Mr Zentai has never directly been accused of being a member of the Nazi Party, or any Hungarian affiliate.
After a series of court battles, it was up to the Home Affairs Minister to make a decision. In November, Brendan O'Connor approved the request. He said it was never up to him to make a judgement on Mr Zentai's guilt or innocence. He said that he as the Minister had fulfilled his obligations.
It's unclear whether it's even a requirement for the Minister to decide whether a case stacks up. It would appear that an individual's only hope of testing the veracity of the allegations against them is to go to court, with all of the attendant expense.
And the question remains whether any of this was necessary.
For some time now, the Hungarian authorities have been saying that they only wish to question Charles Zentai.
Mr Zentai has said he's quite willing to answer questions in Australia if Hungary were to send people to speak to him. There's no evidence that any Australian minister has attempted to facilitate this, preferring to let the extradition process 'run its course'.
Yet, this seemingly goes to the crux of the advice Mr O'Connor received and acted on. According to the Federal Court, if the Hungarian authorities only wanted to question Mr Zentai, then he couldn't be extradited.
It seems the Federal Government has been quite willing to allow an Australian citizen to spend his life savings battling a case that could have, at any time, been halted by the minister responsible.
Ironically, the lengthy process has enabled Mr Zentai's family to turn up evidence favourable to the 88-year-old's case. An elderly Sydney man who was at the Budapest barracks in 1944 has provided a statement saying he remembers Mader and Nagy being involved in the murder, but not Zentai.
And the family has produced correspondence that shows the Hungarian Government knew where Mr Zentai was living in Perth for several decades after his arrival in Australia. No extradition requests were made during this time.
Dr Efraim Zuroff is predictably outraged at the latest turn of events. Dr Zuroff - who's written a book about his targets, including Mr Zentai - wants the Hungarian and Australian governments to keep the case going.
Dr Zuroff is not a lawyer and he admits he's not an expert on the 'ins and outs' of Hungarian and Australian extradition legislation.
Only Mr Zentai knows for sure if his denials about helping kill Peter Balazs in a Budapest military barracks 1944 are true.
If they are true, then Mr Zentai, an Australian citizen, has suffered a massive and very costly injustice.
But if Mr Zentai is lying, then the age of the allegations, the failure to present witnesses and the fading of memories (a major factor in recent cases in Europe) means it's probably too late to do anything about it.
It's up to others to answer why something more wasn't done at a time when a fair trial was possible.
David Weber has covered the Zentai case for AM, PM and The World Today since 2004.