Council property director Richard Pope said the land had been withdrawn from sale until the appeal was resolved.
The council was continuing to work with Mr Manthey on the zoning objection, but if court action proceeded, it was likely to happen later this year.
The resolution of those issues would "improve the attractiveness of the property" to prospective buyers, Mr Pope said.
The council announced in late 2017 it intended to sell the land, which is the last block of 40.47ha vested by the Government under the Queenstown Reserves Vesting and Empowering Act 1971.
The council had previously resolved to sell it to help fund infrastructure.
Last September, Mr Pope said the sale had not been completed to the council's satisfaction despite more than 80 inquiries being received by JLL and Luxury Real Estate and five formal offers to buy the land.