Michael James Chalmers, 36, is accused of killing Asian migrant sex worker Yuko at the Footscray brothel she ran in Melbourne's west in late November 2024.
He was also charged with raping the 62-year-old but magistrate Vincenzo Caltabiano found there was insufficient evidence for a reasonable jury to convict Chalmers of the charge.
The magistrate said the evidence relating to the alleged rape was speculative and it was not possible to say how Yuko sustained her injuries, when she did and who, if anyone, caused them.
Chalmers was discharged of the rape count, as well as the state offence of murder which alleged he unintentionally caused her death during the rape.
But Mr Caltabiano found there was sufficient evidence for a jury to convict Chalmers on a separate charge of common law murder.
The magistrate referenced CCTV footage, which allegedly showed Chalmers speaking with Yuko for about two minutes before he grabbed her in a headlock and pinned her down on a bed.
Chalmers was then captured on the footage leaving the brothel room about 30 minutes later while Yuko was either unconscious or already dead, prosecutors alleged.
Two pathologists previously told the court Yuko likely died from strangulation or smothering.
Chalmers formally pleaded not guilty to the murder charge and he was committed to stand trial in the Victorian Supreme Court.
He was remanded to face a directions hearing in April.
Outside court, Asian migrant sex worker advocates expressed their disappointment at the magistrate's decision.
"The legal system in Australia is incredibly flawed and it is clear that much more work needs to be done in our community to ensure that justice is achieved," Rising Red Lantern project's Damien Nguyen said.
Earlier, dozens of advocates held a vigil outside Melbourne Magistrates Court, calling for change.
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