Sutherland Shire Council has won the first round in a fight to save Hotham House being demolished to make way for a car park.
Sydney South Planning Panel, after a hearing on Tuesday, supported the planning proposal proceeding to the state government's Gateway process.
The council is seeking to add the building in Hoatham Road, Kirrawee, to the local heritage list in the shire's local environmental plan (LEP), which would provide permanent protection.
The panel noted the proposal had been subject to independent advice by a heritage expert engaged by the council.
"The process followed to date is not unusual," panel chairman Jason Perica said.
"It is common for a proposed listing of a property or properties to follow an expert review or advice and the final decision to list a property to follow community consultation with all affected and interested parties.
"This includes the owner being able to analyse and refute any analysis made."
A hearing due to be held today (Tuesday) will go a long way towards determining whether Hotham House at Kirrawee will be demolished to make way for a car park.
Sutherland Shire Planning Panel will consider a council request to support a permanent heritage order being placed on the building.
There is already an interim order in place, but the council wants to go further following a detailed analysis by a heritage consultant of the house which was once part of the state's biggest poultry farm.
The council needs Department of Planning and Environment approval to amend the shire's local environmental plan (LEP) to add the building to the heritage register.
The owner of President Private Hospital, where Hotham House is located, says local residents will be the loser if a demolition ban is imposed.
Macquarie Health Group said if it could not demolish the building, a proposed redevelopment would need to be shifted to the north-west of the site, with "significant noise, privacy and overshadowing impacts" for residents who were not affected by the present design.
The group said required fire safety, access and other improvements, if Hotham House was to continue to be used for patients, would be very costly and diminish the heritage value of the house.
Urban designer and owner representative, David Vago, said the council was "putting bricks and mortar ahead of a healthy community".
"The past seems to be taking priority over the future health of people," he said.
The council received 84 submissions objecting to the demolition of the house due to its historical significance.
The consultant's report to the council said the importance of the Hotham Poultry Farm was identified by a newspaper article in 1926, which described it "as probably one of the best, if not the best equipped, establishments of this kind in Australia".
By 1924, the owner, Albert Tildesley, referred to the farm as "Hotham Mammoth Poultry Farm".
"The house provides a link to the time when poultry farming was the main primary industry in Sutherland Shire," the report said.
"Hotham Farm represents the most successful primary industry in the district - a landmark business of local and state importance."
The report said the ballroom had historic significance at a local level "for its ability to illustrate a way of life, and an aspect of social life in Sutherland Shire at the beginning of WWI.
"Hotham House was an important social centre for local people in an isolated area," the report said.
"Originally built to host [lending institution] Starr Bowkett Society events and parties (Tildesley period), the ballroom later accommodated parish dances and balls."
Macquarie Health Group said in a submission to the planning panel there was "a growing need for proximal access to private health care services in Sutherland Shire".
The shire had one of the highest rates of private hospital coverage in Australia and the group's analysis identified the area as under-served in a number of specific specialties, including rehabilitation, medical, ophthalmology, dialysis and general surgical care.
"While President Private provides exceptional care to all its patients, we recognise that the standard and capacity of the hospital accommodation is not what it was and requires significant investment and expansion to upgrade it in line with current health facility guidelines," the group said.