A developer has submitted two Code of Conduct complaints and will take Wingecarribee Shire Council to court.
The action was prompted by a second refusal for a proposed subdivision at a council meeting on November 27.
The proposed development at 40 Sir James Fairfax Circuit in Retford Park Estate consisted of two detached dual occupancy buildings and a subsequent subdivision.
The subdivision would create two lots of 570 metres squared and 500 metres squared.
More than 90 Retford Park residents opposed the development and said it was in stark difference to the rest of the estate.
Representative Gi Kim said they had all invested "a fair amount of their life savings to build dream homes in the estate".
"We want to live in this unique part of Retford Park that strives to uphold heritage values and culture," Mr Kim said.
"Should this DA be approved a precedent will be set for the other  corner blocks to be subdivided.
"We are seriously concerned for the resulting loss of privacy, increased traffic, noise and significant change to the character and heritage style of our estate."
The developer Paul Samulski will take the matter to the Land and Environment Court.
He has also put a Code of Conduct complaint against councillor Graham McLaughlin and mayor Duncan Gair.
While community members were against the development, council staff recommended approval subject to conditions.
Council staff member Nicholas Wilton said each individual application was dealt with on its merits.
He said the development had been assessed and it complied with the council's Design Control Plan and Local Environment Plan.
In contrast Mr Kim said the covenant and Retford Park Estate guidelines did not allow subdivision.
In an address to council Mr Samulski said his development was compliant with council's DCP and LEP policies.
"There are members of the public here today, as well as councillors, who have been beneficiaries of similar policies in their own pursuits of dual occupancy developments," he said.
"We cannot have a situation where the integrity of local and state policy is undermined simply because some individuals don't like the proposal."
Cr McLaughlin put forward the motion to refuse the DA.
"The whole intention of corner blocks was to enhance this development, not degrade it by slicing it up into smaller pieces," he said.
The motion caused debate with Councillor Garry Turland and Councillor Grahame Andrews firmly against the refusal.
Cr Turland said if the development complied the public should not have to fund a case at the Land and Environment Court.
Cr Andrews said Mr Samulski had a right to go forward with the development.
After lengthy debate the development application was refused five votes to three.
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