The Environment Court has knocked back Todd Property's proposal for a $1.4 billion, high-density housing development at Okura on Auckland's North Shore.

Todd Property, one of New Zealand's biggest property developers, owns a 130ha rural block outside Auckland's northern city limits.

The Okura block is near Vaughans Rd, North Shore, near the Okura Estuary. The land is north of Todd's 2000-residence Long Bay project.

At issue was the position of the rural urban boundary near the Okura Estuary - a controversy that has been running since 2003.

Todd Property's Okura Holdings had previously sought permission from Auckland Council for a 1000 house development on the land but was barred.

The company then took the issue to the Environment Court.

The Environment Court, in its decision, said the Okura Estuary was an important habitat for avifauna in the Auckland and the wider coastal environment.

"We have found that it is inevitable that increased human activity in the vicinity of the Estuary arising from urbanisation of the Okura Holdings Ltd (OHL) land will have significant adverse effects on bird life in the estuary," the court said.

The court said it had considered Auckland Council's Unitary Plan objectives and policies relevant to marine and birdlife.

"We were not confident that the OHL proposal would protect marine ecology from adverse effects as required by the objectives and policies and have identified the need to take a precautionary approach in that regard.

"We have found that the OHL proposal does not protect avifauna in the Estuary as required by the objectives and policies," it said.

The court said the proposal would have had "significant adverse effects" on natural character and landscape values of the site and surrounding environment.

"We have identified that in their assessment of effects of the OHL proposal on natural character and landscape values, OHL and its advisers failed to take a broad overview of the aggregated qualities of the Estuary and what we somewhat cautiously identified as the distinctive sense of place and special character qualities of the Estuary and its high vulnerability to potential adverse effects of urban development."

Todd Property said it was reviewing the court's decision.

In April, the Environment Court stopped a housing development from going ahead at Crater Hill, on the edge of the Manukau Harbour at Papatoetoe.

The court declined an appeal by the Self Family Trust and adjacent landowners against Auckland Council's Unitary Plan, which zones Crater Hill and Pukaki Peninsula as rural land outside the Rural Urban Boundary.

The trust had proposed up to 300 houses in the eastern part of the site by the Southwestern Motorway and up to 275 houses on the lower slopes of the crater.

Auckland councillor Chris Darby, who chairs the planning committee, said it was "entirely fitting" that the proposed Okura development was deemed not to be appropriate by the court.

"This decision is further evidence that we will defend the rural-urban boundary to ensure that there is good breathing space around the city limits of Auckland for people and nature," he said.

Both Crater Hill and Okura were significant decisions, he said.

"These are very important decisions that have gone the way of the council, which I think on both counts reflects strong community opinion," he said.

The Long Bay Okura Great Park Society, which opposed the development, said the decision was a "big win for the people of New Zealand".

Pat Baskett, the society's convenor, said: "Today's decision gives the Marine Reserve and its wildlife some important protection but there are still threats from runoff from development and the Auckland Council must get tougher on this."