Auckland's secretive multimillionaire Spencer family have been banned from building two sleek new architect-designed houses on their $75 million Waiheke Island estate.

The publicity-shy Spencers, who are estimated to be worth $650 million, control an entire end of the island via their 1800ha cattle, sheep, wine and olive operations.

For three decades, they have dominated the unpopulated northeastern portion from Owhiti Bay to Man O'War Bay via their Man O'War Station with six houses, farm buildings, a rapidly expanding winery and 90,000 native trees which they planted.

Expert Environment Court witnesses said the station's owners wanted to live in a new main dwelling "as the principal family base for the owners of the property when resident on the island".

John Spencer's son and heir, Berridge, directs the station company although ownership traces back to Clime Asset Management, the Spencers' main business.

The houses were proposed for 725 Man O'War Bay Rd, listed on QV as an 802ha site worth $34.4 million: $31.95 million land and $2.49 million buildings.

House-building and earthworks are non-complying activities for the dune site, the only change allowed being eco-sourced planting.

Six archaeologists, including one for Ngati Paoa Tribal Trust, were court-ordered into a caucus to agree on the land's heritage values. Evidence was presented of the area holding valuable objects such as moa and tuatara bones, fish hooks, obsidian flakes and chert drills.

Jeff Fearon of Fearon Hay designed a sleek, elongated three-bedroom-three-bathroom, 570sq m home for the site, taking design cues from the wartime concrete defence bunkers around beautiful Stony Batter.

A 100sq m guest pavilion, the size of the average older Kiwi home, could be used for on-site marketing of Man O'War wine and 30,000 cases would be produced from the Spencer's land by 2012, the court heard.

Mr Fearon said the guest pavilion would appear lightweight and delicate with a high degree of transparency, a canopy roof floating over its plinth, supported on slender steel columns.

Both houses would be built in roughcast concrete with metal joinery and appear "recessive", unlikely to produce significant glare. Earthworks would be minor because the houses would be single-level.

The houses would be of minimal visual impact in the bay but Mr Fearon acknowledged there were no structures in the area which were visible from land or water, apart from post and wire supports for grapevines.

The Spencer holdings are at the least-populated end of the island, a private zone far from the larger settlements around Oneroa, Palm Beach, Onetangi and Ostend in the west.

Auckland City had granted the station permission to build but the Auckland Regional Council opposed that in the Environment Court in hearings in April and May.

The ARC said it was wrong to put such large houses on one of Waiheke's few remaining undeveloped coasts when only 160 visitors a year would attend the wine marketing courses. Allowing the houses would result in further developments.

Judge Laurie Newhook and two commissioners decided that consent must be refused and agreed with the ARC that more places would be developed in the unspoiled area if they allowed the Spencer proposal.

"We note that already this applicant has sought consent for a dwelling in the neighbouring Cactus Bay for which Auckland City Council has declined consent, resulting in an appeal yetto be resolved," the court said.

The effects of the house-building proposal on the heritage aspects of the property were "relatively neutral" and could be addressed by imposing conditions, the court decided.

But it put more weight on the effects on the natural character of the coastland environment and its outstanding natural landscape.

The effects would be more than minor and there were adverse impacts on the environment from granting consent, the court ruled.

Planning rules on landscape character, natural features, ecosystems, visual amenity and historic heritage swung the case.

ARC chairman Mike Lee commented: "We succeeded in protecting the integrity of this outstanding natural coastline."

* Owned a pulp and paper business and was nicknamed the "Toilet Paper King".
* Was NZ's richest man for many years.
* His family own the north-eastern end of Waiheke Island, and estate worth $75million.