In a closed session at their meeting on Tuesday, councillors decided to start NSW Land and Environment Court proceedings over the "unauthorised" structure at 555 Forest Siding Road, off Middle Arm Road.

Notices would also be served on any contractor or party known to have undertaken work on the site, to glean information about its extent and the land use.

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After the meeting, general manager Warwick Bennett said the council had to act.

"To build such a substantial structure that is not permitted is a very serious breach of the law and a disregard for planning processes," he said.

"You just can't do what you want."

Perched high on a hill that planners said was illegally cleared and excavated, the zincalume shed-like structure measures 46-metre long by 21m wide by 7.7m high.

Inside, 13 bedrooms each had ensuites and there was clear evidence it had been used as a residence, an April council report stated.

Following planners' inspection, the owner lodged a development application for approval. Councillors refused this in April and endorsed demolition and 'restore works' orders.

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But on May 15, a Middle Arm resident notified the council of "significant heavy vehicle movements" entering and leaving the property. They claimed heavy machinery was also being operated onsite.

Council officers inspected that afternoon and said they found a large structure being built, which involved "extensive excavation," concrete slab and footings. A person at the property advised it was a chicken coup. Planners said it was not exempt development.

In addition, more large-scale excavation had occurred, with fill deposited in an "unstable area," and a major sandstone retaining wall was under construction.

"It was established that further works had been completed on an existing small shed structure at the property, with additional furnishings visible compared to what was identified in mid-2019 at the commencement of compliance actions," environment and planning director Scott Martin reported in June.

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He said the building was being used as a residence and smoke was coming from a chimney. The owner also acknowledged that they housed people.

In addition, there was an unapproved onsite sewage management system, which had been installed backwards, and effluent was draining downhill "and likely impacting on watercourse and downstream quality," Mr Martin reported.

WaterNSW has inspected the site.

Mr Bennett said the septic tank was "inadequate" for the property's use.

"We need people to vacate the buildings and the council's stance is to demolish all buildings, except the garage, which is the only one that has approval (from 1981)," he told The Post.

A stop work order was issued on May 15, followed on May 20 by a stop-use order and clean-up directive related to the wastewater.

While the owner flagged that he wanted a review of the April refusal, Mr Bennett said this week that no such request had been lodged.

Councillors heard in early June that further work had occurred despite the May cessation order. Planners had again told the owner to stop and to vacate the buildings.

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This week, Mr Bennett said work had "slowed" at the site but compliance officers would inspect again before court papers were lodged.

The Post endeavoured to contact the owner, without success. However, an earlier consultants' report stated that the owner initially believed he did not need a DA.

He later said he now understood this was not the case but argued it was a similar size to other structures in the area, was well set back from the road and well maintained.

The Post understands three generations of the one family are living at least intermittently in the buildings.

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Meantime, Deputy Mayor Peter Walker, who lives on Forest Siding Road, said he did not have to declare an interest in the matter as it was always going to be handled by the council's planning department.

He told The Post he had not made the initial complaint about the work.

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