A Melbourne man has lost a court battle to keep his beloved pet sheep Baa on his suburban property.

Vu Ho argued in the Victorian Supreme Court that the City of Greater Dandenong had no power to fine him or order the removal of the sheep from the property.

But Justice Cameron Macaulay today ruled the council did have the power to make local laws concerning the keeping of animals.

Lawyers for the City of Dandenong asked that costs be awarded against Mr Ho.

But Justice Macaulay adjourned the matter to allow lawyers for Mr Ho time to read the judgment before they made submissions on costs.