A Whitebridge community group has expressed relief at a court's decision to reject a fourth storey on a long-time contentious development in the suburb.
"There's relief that the right decision was made," Whitebridge Community Alliance spokesperson Michelle Burdekin said.
"There's some frustration that it took a legal decision to say quite clearly that the developer's reasons for breaching controls were not justified."
Lake Macquarie City Council staff had supported the fourth storey [which included two apartments] at the Fettlers Whitebridge development, but councillors voted it down last year.
Developer SNL Building Construction appealed against the decision.
In dismissing the appeal, Land and Environment Court Commissioner Michael Chilcott said it had not demonstrated sufficient planning grounds to "justify contravening the standard".
"I have concluded that the applicant's written request to vary the height of [the] building's development standard ... is not well founded," commissioner Chilcott concluded.
Commissioner Chilcott added that he was not satisfied that the extra storey would be in the public interest.
SNL Building Constructions approvals director Wade Morris said the decision was "obviously disappointing in light of the technical and professional support it had throughout the assessment process".
"Having delivered the first stage of homes, we'll focus now on construction and delivery of the remaining stages of this quality housing project," Mr Morris said.
The Whitebridge development has been a simmering source of tension in the community for six years.
Hundreds of people opposed the plan when it first emerged as part of a planning philosophy to encourage more medium density housing closer to town centres.
Many felt the plans were simply too big and did not suit the area's character.
The Joint Regional Planning Panel approved 89 apartments on the site in late 2015, but removed the fourth storey with the two top-floor apartments.
The developer didn't give up. It later lodged a new application with the city council for the fourth storey.
This led to accusations last year that a planning "loophole" was being used to get around the panel's decision.
The developer said it had used a "legitimate process" available under the state's planning laws.
Ms Burdekin expects community feelings about the project to ease over time.
"We did what we could. Along the way there were improvements [to the plans]. There are still some things that niggle and will continue to do so," she said.