Cr Nick Campbell-Jones said council's decision to refuse consent previously given to a Bowral development on the grounds neighbours had not been notified was illegal.

Environment and planning director Ray Darney advised councillors there were no legal grounds for overturning council's approval in the agenda for last week's meeting.

He said approval could only be withdrawn if the development was in conflict with a draft local environment plan or if a legal error had been made.

Mr Darney advised councillors it did not appear either condition had been met in the case of the house extension proposed for 63 Shepherd Street.

Council voted to overturn the consent given, saying it had made a mistake in not telling the neighbours at 61 Shepherd Street about the extension which would significantly block sunlight from their home.

Cr Sara Murray said even if the owner of 63 Shepherd Street reapplied for approval and got it, at least the proper process of neighbour notification would have been followed.

"Clearly the person doing the extension has done nothing wrong," she said.

Cr Campbell-Jones, who was not at last week's meeting, said he had been informally advised council's decision was illegal and could be defeated if they were taken to court.

"We keep on spending giant amounts of money on legal costs, and they go and do something like this," he said.

"The Land and Environment Court would not back council on this because council's own experts said it was fine."