Staff said at the time defending the bylaw in court could cost the council $150,000.
In a written statement, the trust said the council's decision was "disappointing".
"This brought to an end what was a sensible arrangement to try and avoid court proceedings."
Further talks with council staff had failed to reassure the trust that its legal issues with the bylaw would be addressed, so it was continuing down the court route.
The trust said it was talking to the court about securing a hearing date in Tauranga in March next year.
It was open to further talks with the council in the meantime.
Tauranga mayor Greg Brownless said the reignition of the legal proceedings was expected.
He said the decision of the council was to defend the bylaw, something some in the community - retailers among them - were keen to see it do.
"They are the ones who have to cope with people sitting outside their doors."
According to emails released to the Bay of Plenty Times last week under official information legislation, councillors were lobbied in the days before the August vote not to water down the bylaw.
Several councillors received emails from supporters of the bylaw, including retailers, asking them not to water the bylaw down.
Tauranga MP Simon Bridges - National Party leader and a former prosecutor - also told the Bay of Plenty Times the council should defend the bylaw.
What is a judicial review?
A High Court judge reviews the actions or decisions of a public or private administrative body to see whether they acted within their legal powers.
The judge can review the process used to reach the decision, whether the decision-maker acted within the law or whether the decision was unreasonable.
If the judge finds in favour of the applicant, the judge can ask for the decision to be reconsidered.