The Court of Appeal says there was not enough evidence to suggest he smothered her.
His lawyers successfully argued that it was possible he could have unintentionally killed the mother-of-three during an argument at their home in Brookfield, in Brisbane’s west.
His lawyers then suggested a hypothesis that he covered up the death out of “panic”.
In the 2014 murder trial that gripped the nation, Baden-Clay denied killing Allison and said shaving caused the pronounced scratches on his face.
The Court of Appeal, however, now says that while Baden-Clay lied about the cause of the scratches and tried to hide his wife’s body, there was a reasonable hypothesis he was innocent of murder.
It could not be ruled out that there was a physical confrontation in which Allison fell and hit her head, the ruling by Chief Justice Catherine Holmes, Justice Hugh Fraser and Justice Robert Gotterson found.
“Smothering, the crown’s thesis, was a reasonable possibility, but while there was also another reasonable possibility available on the evidence, the jury could not properly have been satisfied beyond reasonable doubt that the element of intent to kill or do grievous bodily harm had been proved,” Justice Fraser wrote in the findings.
Baden-Clay, 45, reported his wife missing in April 2012 and her body was found 10 days later beside a creek.
He was convicted in 2014 and jailed for life, with a non-parole period of 15 years.
New sentencing submissions for the manslaughter conviction will be heard in January.
Meanwhile, Allison Baden-Clay’s family released a statement saying they were disappointed and stand by the original court verdict.
“They await the legal process to play out in the hope that justice for Allison will be served,” the statement from the Dickie family said.
“The family would like to thank the Director of Public Prosecutions (DPP) for their ongoing efforts in seeking justice for Allison, as well as the broader public for their messages of support.”
“As always, the efforts of the family remain centred around the well-being of Allison’s daughters, who now face a period of uncertainty.”