WDC had not referred the non-complying applications to the authority, and had, "parked" them in the hope they would comply when they saw agreeing bars have their licences renewed. Judge Hole said this was in breach of the 1989 act and was "illegal".
He said the policy was "lengthy, wordy, complicated and possibly confusing and ambiguous".
Grant Couchman, regulatory services manager at the council, said the agency had 219 liquor licences, renewed every three years. He said it was easier to deal with all of the non-complying applications at one time, so they were held back.
The agency would not face penalties for its action.
David Sinclair of McMorrissey's and Killer Prawn said bars should not lose out because a minority of drinkers misbehaved.
"I don't want irate customers or have my door staff deal with that. When we provided a great buzz during the Rugby World Cup, everyone was happy.
"Why should we suffer because a small portion of the population can't control themselves?" Phil Sentch, owner of the Tote and Poke and Rynoz on Cameron St and president of the Northland branch of the Hospitality New Zealand, said he won't refuse patrons entry.
"It's not safe for customers or door staff to turn people away, that causes problems at the door.
"The council are afraid of people migrating from door to door. As far as I'm concerned, people wander off looking for friends. They get some fresh air, get a hot dog and a break from drinking. Surely that's better than having them stay inside for the night where they are more inclined to have that extra drink."
Mr Sinclair and Mr Sentch operate the system at their own discretion.
"On a Saturday night, if I feel it's too busy I'll do a one-way door so everyone doesn't spill on to the street at the same time," Mr Sentch said.
They say the city will have economic barrel fever with the loss of trade and tourists riding their wagons elsewhere.
Mr Couchman said Killer Prawn served as a test case and it was anticipated that one-way door would become operative six weeks after the judge's decision.
The applicants could appeal the decision to the High Court.
The authority will hear the Bacio and Head Office applications at Whangarei Court on September 16.
It may pull out the pistols and refuse licences but it is expected that a blanket compliance will apply to all bars by a certain date.