It spurred one councillor to brand the law governing local alcohol policies as "stupid", because it allowed big business to use the courts to overturn council decisions based on the wishes of the community.
The decision may have repercussions in Whangarei, where that council has mooted a more restrictive policy with off-licence hours to 9am-9pm. That has also been appealed but has yet to reach court.
Following an appeal in December by the two big supermarket chains, liquor retailers and Kaikohe pensioner Shaun Reilly, the Alcohol Regulatory and Licensing Authority ordered the Far North District Council to take its provisional Local Alcohol Policy back to the drawing board.
The supermarkets had argued the policy was too restrictive, Mr Reilly that it wasn't restrictive enough.
At last week's council meeting staff recommended tweaking the policy, as agreed with the appellants and the Health Ministry, and adjusting the maximum off-licence opening hours to 7am-10pm.
That would have kept the current opening time but brought back closing by one hour.
However, councillor Ann Court said there was no guarantee the policy wouldn't be appealed again. So far it had cost ratepayers $180,240 in lawyers' fees alone, and carrying on when the council couldn't prove its case was futile.
Everyone knew that alcohol caused harm, but proving in court that it could be reduced by cutting off-licence hours was a different matter, she said, while abandoning the policy wouldn't cost anyone their democratic rights because they could still have a say whenever someone applied for a licence.
Councillor Dave Hookway said councils around the country had found themselves in the insidious position of fighting a "stupid" law that allowed a council decision to be appealed in court.
He wanted the policy adopted with the changes agreed to by the appellants.
The motion to abandon the policy was carried 5-4.
The public gallery was packed during a sometimes acrimonious debate in which various councillors accused each other of conflicts of interest.
Jane Johnston, who assisted Mr Reilly in his campaign, said the decision to bin the policy had "come out of the blue".
"We're gutted. This process has cost us a lot of time, effort and money ... We didn't win everything but we'd made good progress. Now they've thrown it all out."
The campaign would now have to focus directly on alcohol suppliers, she added.
However, John Maurice, owner of Kaikohe's Bank Bar and Northland chairman of Hospitality NZ, said it was the right decision. Existing legislation was enough to control alcohol sales, and no ratepayer wanted to see yet more money spent on lawyers.
It would not lead to open slather, but would give more room to move with opening hours in tourist spots such as Paihia.
In any event, problems were not caused by on-licences, Mr Maurice said. People were better off being in on-licence premises than going to an off-licence and grabbing "a couple of slabs".
People could still voice their concerns any time a liquor licence came up for renewal, he added.
Kaikohe pastor Mike Shaw, who is campaigning for tighter alcohol regulation, said the decision was "very disappointing". It appeared that councillors believed avoiding court action outweighed their obligation to listen to the community.
The 2012 Sale and Supply of Alcohol Act gave councils the right to set local rules around liquor sales. It was the result of concern in places like South Auckland about the proliferation of bottle stores, but most attempts so far to create local alcohol policies have become mired in legal action.
* The Far North appellants were Progressive Enterprises, Foodstuffs, The Mill, Independent Liquor, Hospitality NZ and Mr Reilly.
