Mr Lee had told the council that as Cameron Creek had a catchment area of less than 50ha, he was permitted to divert the flow of the creek.
Disturbances and the reclamation of river beds are not permitted activities under the Resource Management Act (RMA).
Cameron Creek was a perennially flowing river, which was known to be a spawning stream for trout and contained other species, such as long-finned eels and the endangered Clutha flathead galaxias.
Mr Lee and the company will be sentenced by an Environment Court judge in November.
Inderlee faced a maximum penalty of a fine up to $600,000, and Mr Lee faced a maximum penalty of two years' imprisonment or a fine of up to $300,000.
Speaking yesterday, Mr Lee said he would take the charges ''on the chin'' but felt the council had found a technicality in the RMA with which to charge him.
Mr Lee said he had spent hours studying the RMA and the council policies and had a different opinion on what he had been allowed to do.
''It's a shame really, because the goal always was to run it as a clear clean waterway that the public would be happy with, not the silt-laden mess it was in when we got here.''
Since they brought the property in 2003, the couple had put time and money into rejuvenating the area, which had become a swampy bog after the 1999 floods, Mr Lee said.
After the floods, the creek no longer flowed into the Cardrona River and Mr Lee said he had diverted it into its original channel, turned it into a spawning creek and had started replanting vegetation.
Despite the charges, Mr Lee said he still hoped the facility would open during the summer.
It was not the first hiccup the Lees had encountered during the development.
Their Queenstown Lakes District Council resource consent application was opposed by neighbours and a council planner, but was eventually granted by independent commissioners in November 2015.
Fish & Game also opposed their application for a fish farm licence from the Ministry for Primary Industries.
