A picture would help assess the situation more fully. Two things stand out, your deed covenant that says no walls or hedges when the rest of the houses have walls and your neighbor threatening court action because he needs your property to use his driveway.

Does your deed covenant say no fences?

Does your neighbor have a right of way agreement to use your property?

The simplest solution to your problem may be short decorative push in metal fencing/edging that you can generally find at any big box store.

I cannot remember the exact wording of the deed right now, but lawyers have looked at it and they say nothing in front of the building line which would include fences, in fact the neighbour has had someone 3 or 4 doors down have to remove fencing from the side of their house by the council, just one of those retired neighbours with nothing better to do, even though it has zero impact on their property.

The neighbour does not have right of way to use our lawn, nor do they need to. The only reason he says he needs it is because he has to turn into his drive and his drive is curved, so he just trashes our lawn a bit like cutting a corner when there is no need to.

Basically we have spoken to lawyers, he has no rights but would likely have a case should we erect anything and he takes it further, hence we were thinking some kind of concreted in edging blocks just high enough to deter driving on it, but cant imagine that would look all that great as its not around a planter like they would usually be used for.

The other pain is the driveway has concrete haunching below our grass holding up the driveway edging, so hammering in some picket fences or similar isn't possible as it would have to go through the concrete. Drilling into it is possible for poles etc though.

Last option we thought of as a temporary measure is large landscaping stones sat on the grass, not the prettiest thing and not what we want ideally, but atleast it may stop the grass getting ruined further.

Large boulder in the corner that gets driven over with groundcover shrubs or grasses planted around it:

planting beds in the areas that get walked on:

A boulder is great, but you can get the same result with something lower or cheaper. A mailbox, lightpost or just post with your street number. Plant low-growing plants around it. For the kids, get something thorny. But, really, you can do an ornamental grass. Like pink muhly. It's low-growing, not a hedge and will discourage walking. You could put a shrub or small tree in the right spot and make a ring around it with bricks on the diagonal (so the corners stick up). It's quite pretty and probably a deterrent to drive over.

But really, we need pictures for better advice.

Look at plants your neighbors have.