The land is owned by Infinity Groups Peninsula Village Ltd and Wanaka Bay Ltd, which is owned by Murray Frost, of Wanaka.
As Peninsula Bay Joint Venture, the companies applied to the Queenstown Lakes District Council to change the district plan under private plan change 51 to allow it to build 26 more residential sections on the open space zone, set aside for reserve.
The plan change was opposed by council planners, the society, Forest and Bird and more than 200 submitters.
The application was declined and the company has appealed the council's decision to the Environment Court.
Mediation will be held next month before a court hearing proceeds.
Society spokesman Julian Haworth said the society only agreed to the original 400 sections being developed on Peninsula Bay because ''the deal was, as soon as they'd finished the last house, the open space would become a council reserve and the community was going to get something decent out of it.''
''They haven't finished the last house but to apply to build more houses now is morally indefensible and just plain greedy,'' he said.
Bike Wanaka president Oliver Young also opposed plan change 51.
He said he would be attending the mediation hearing next month on legal advice.
Mr Young said the only reason the Peninsula Bay development got the go ahead in the first place was because of the stipulation that the open space area would become a reserve.
''The fact that the developers have gone against their word shows a total lack of integrity and I think that's a real shame.''
QLDC planning practice manager Blair Devlin said there was an expectation in the Environment Court that parties would participate in and negotiate at mediation constructively and in good faith.
''... mediation can narrow the issues in dispute, resulting in faster, more efficient appeal proceedings, which saves ratepayers money.''
Peninsula Bay Joint Venture declined to comment.
