Development company Bradcorp has lost the right to sell its land in North Wilton to Chinese-backed development company, Risland.
Risland, formerly known as Country Garden Australia, fought for its right to back out of a partnership with Australian developer Bradcorp.
Bradcorp had previously entered into option agreements with Risland over the purchase of a $300 million dollar site in the northern precinct of the future Wilton New Town.
However Risland decided not to go ahead with its offer to buy the 870-hectare site as it believed Bradcorp had not held up its end of the bargain in the sale agreement.
Bradcorp lodged court proceedings in the Supreme Court earlier this year but last week a judge ruled in Risland's favour.
The Macarthur-based development company has since announced it will appeal the Supreme Court's decision in coming months.
Bradcorp chief executive Peter Brennan said the company had reviewed the judgment and would "absolutely appeal the decision".
"We believe we have met our obligations," he said.
"The judgment is based on legal technicalities and in no way impacts our vision for the project and its delivery for the people of Wollondilly."
Mr Brennan assured the Wollondilly community that development of the housing precinct in north Wilton would still go ahead as planned.
"The Bradcorp team is finalising applications for the first stage of North Wilton that also includes key infrastructure and amenity that is consistent with the master plan previously exhibited," he said.
"North Wilton is an exceptional and important project and we are looking forward to the constructive input from the community during these planning processes.
"Bradcorp has a long history of pursuing the best outcomes for Macarthur and will continue to do so.
"We are part of this community and our contribution over many years speaks for itself.
"We will not compromise on our vision for a unique, connected and sustainable North Wilton that has been 17 years in the making.
"We are committed to working with a delivery partner that has both the capability, commitment and experience to deliver something extraordinary for the people of Wollondilly."