Woollahra, which faces a compulsory amalgamation with neighbouring Waverley and Randwick councils, has lodged papers to appeal to the High Court after it lost its challenge to the merger in the NSW Supreme Court. It had previously failed in the Land and Environment Court.

In a letter to fellow councillors last week, Woollahra councillor Jeff Zulman​ questioned the merits of continuing to spend ratepayers' funds fighting what could be a losing battle.

"For Woollahra Council the amounts we are spending represent probably more than the combined operating surplus that council has achieved in our last four years in office," Cr Zulman wrote.

Cr Zulman, who told the council last week that he would be resigning next month for unrelated reasons, may have over-estimated the relative amount the council is spending on the legal challenge.

A spokeswoman said the council had so far spent about $850,000 on legal costs in relation to the mergers. It had also spent $270,000 on community information campaigns.

But that $1.12 million – which is what the council has spent prior to its High Court appeal – is less than last year's council budget surplus of about $1.8 million.

Speaking to Fairfax, Cr Zulman said he remained opposed to the merger, but the costs of fighting the process needed to be assessed in a pragmatic manner.

"Even if we have a chance of being right, do the costs and the risks justify it?" Cr Zulman said.

"Are we just fighting a lovely stoush between one level of government and another paid for by the residents? That leaves me decidedly uncomfortable."

The merits of spending millions of dollars in ratepayers' funds in legal challenges to the Baird government's merger agenda has been an issue across the state. The creation of 11 new merged councils remains pending, after councils that would have been merged resolved to fight the process.

Some councils have been partly successful, meaning the state government will have to at least redo elements of reports justifying mergers. That is the situation involving mergers to include Mosman, North Sydney and Strathfield councils.

Woollahra councillors, including Cr Zulman, will receive a briefing from their lawyers on the prospects for an appeal on Monday, February 6. The council does not expect the court to hear the application for special leave to appear before the High Court until at least February 10.

The council's spokeswoman said the costs of fighting the mergers "pale into insignificance" against the higher rates the council says will be levied if the merger went ahead.