The newspaper, which had accused the 68-year-old son of the 1930s Fascist leader Sir Oswald Mosley of taking part in a "sick Nazi orgy" with five prostitutes, must now pay him a record £60,000 compensation.
Mr Justice Eady did not make an additional award - which would have been unprecedented in invasion of privacy cases - of punitive exemplary damages.
Mr Mosley, president of the FIA (Federation Internationale de l'Automobile), did not dispute taking part in the sadomasochistic roleplay at a rented Chelsea basement flat, but said it was consensual and private, with no Nazi overtones.
He said his life was devastated by the March expose and by the newspaper putting secretly-filmed footage of what it called a "truly grotesque and depraved" event on its website, attracting at least 3.5 million hits at the last count.
James Price QC told London's High Court that the "gross and indefensible intrusion" by the tabloid in its role as a titillating Peeping Tom was made substantially worse by the false suggestion that Mr Mosley was playing a concentration camp commandant and a cowering death camp inmate.
The newspaper's editor, Colin Myler, said he believed the story was one of "legitimate public interest and one that I believe was legitimately published" and that it was "absolutely not true" that the newspaper had fabricated the Nazi aspect.
Mr Mosley was in court but showed no emotion at the ruling.
The judge said: "I decided that the claimant had a reasonable expectation of privacy in relation to sexual activities (albeit unconventional) carried on between consenting adults on private property.
"I found that there was no evidence that the gathering on 28 March 2008 was intended to be an enactment of Nazi behaviour or adoption of any of its attitudes. Nor was it in fact. I see no genuine basis at all for the suggestion that the participants mocked the victims of the Holocaust.
"There was bondage, beating and domination which seem to be typical of S and M behaviour. But there was no public interest or other justification for the clandestine recording, for the publication of the resulting information and still photographs, or for the placing of the video extracts on the News of the World website - all of this on a massive scale.
"Of course, I accept that such behaviour is viewed by some people with distaste and moral disapproval, but in the light of modern rights-based jurisprudence that does not provide any justification for the intrusion on the personal privacy of the claimant."
The judge added: "It is perhaps worth adding that there is nothing 'landmark' about this decision. It is simply the application to rather unusual facts of recently developed but established principles.
"Nor can it seriously be suggested that the case is likely to inhibit serious investigative journalism into crime or wrongdoing, where the public interest is more genuinely engaged.
"It is necessary, therefore, to afford an adequate financial remedy for the purpose of acknowledging the infringement and compensating, to some extent, for the injury to feelings, the embarrassment and distress caused.
"I am not persuaded that it is right to extend the application of exemplary (or punitive) damages into this field or to include an additional element specifically directed towards 'deterrence'. That does not seem to me to be a legitimate exercise in awarding compensatory damages.
"It has to be recognised that no amount of damages can fully compensate the claimant for the damage done. He is hardly exaggerating when he says that his life was ruined.
"What can be achieved by a monetary award in the circumstances is limited.
"Any award must be proportionate and avoid the appearance of arbitrariness. I have come to the conclusion that the right award, taking all these circumstances into account, is £60,000."
While the court continued legal argument, a statement released on behalf of Mr Mosley said: "This judgment has nailed the Nazi lie upon which the News of the World sought to justify their disgraceful intrusion into my private life."
"By law we are all entitled to have our privacy respected. The News of the World invaded my privacy, dreamt up the most offensive headline possible, and decided that I should not be contacted before publication to prevent me asking the Court for the injunction I would have been entitled to."
"They and their lawyers have then conducted this case so as to cause maximum embarrassment in the hope that I would be discouraged from continuing.
"I needed a strong judgment to make it absolutely clear that what the News of the World did was wrong. Obtaining that in the full glare of the media has been extremely difficult but I am delighted that we have achieved what we set out to do.
"I hope my case will help deter newspapers in the UK from pursuing this type of invasive and salacious journalism. I have learnt first hand how devastating an invasion of privacy can be and how readily papers like the News of the World will destroy lives in the knowledge that few of their victims will dare sue them. I want to encourage a change in that practice.
"As I promised at the outset, the damages will go to the FIA Foundation to further their work for road safety and the environment.
"Finally, I would like to thank all those who have supported me during this difficult period."
The News of the World now faces a total costs bill of around £850,000, with the judge ordering an interim payment of £200,000 on account.
Mr Mosley's costs amounted to about £450,000 with the newspaper's coming to £400,000.
Comments