[2] After his return to Australia in 1862, Dalley resumed his legal practice, and became the leading counsel in criminal cases in Sydney and represented Carcoar from 1862 to 1864.

In 1868 he defended Henry James O'Farrell for attempting to assassinate Prince Alfred, on grounds of insanity, but was not able to prevent a conviction and a speedy hanging.

[3] In February 1875 Dalley joined the third Robertson ministry as Attorney General of New South Wales and was nominated to the Legislative Council.

For the next five years Dalley took no part in politics, although in 1881 he petitioned against the Chinese restriction bill on the floor of the Legislative Council and managed to change some of its worst features.

[2] In February 1885 Dalley, as Acting-Premier during the absence of Stuart from the colony, offered a detachment of New South Wales troops to go to the Sudan.

The property Dalley bought also included an existing cottage and a stone tower that had previously housed a camera obscura.

The Gothic Roman castle was built in 1882–1883 and by 1884 Dalley is listed as living there, although the following years were among his busiest and he had other properties closer to the city, so the amount of time he spent at Marinella is uncertain.

Dalley's Castle was demolished in 1939, despite strong local opposition, and Housing Commission flats, ironically called Marinella, were built on the site.