The Southgate, Chichester, bar is licensed to open until 2.30am at weekends but an older planning restriction says it must shut at midnight.
In the latest episode, landlord Jaspar Group sent a letter to Chichester residents, asking them to raise concerns to the council over the planning breach.
But bar manager Charlie Rose said: “There have been so many people coming in, stopping us in the street, to offer us their support.
“It has created a massive backlash on [Jaspar].”
Licence holder Nick Marshall said: “This letter went out to all the residents. They were kind enough to send one to our flat as well.”
The letter said: “We are a family owned company who has been granted planning permission to regenerate the [next door] site.
“It has recently come to light that our neighbour is not operating within their permitted planning use.
“It is our view the council’s planning department should take enforcement action against the venue and that the venue’s licence should be reviewed.”
It invited residents to contact their local politicians to raise concerns.
Nick added: “The big one that they tried to hinge it on was the crime statistics, it was an interesting move by them.”
Nick said the business and Chichester District Council were in discussions and hoped the planning issue would soon be rectified: “The council have been absolutely great, they have been a pleasure to deal with.”
Trade at The Vestry has reportedly increased since the dispute began.
When asked what would happen if the council does lift the planning restriction, staff said that a party to celebrate was not out of the question.
A spokesman for Jaspar Group said: “Jaspar took the decision to write to The Vestry’s neighbours as we feel they have a right to have a say in what goes on in their neighbourhood.
“In essence a nightclub has started operating in Southgate without the necessary planning permission and without local residents being consulted.
“Despite The Vestry being aware they are operating in breach of their planning permission, for over seven months nothing has been done by the venue to regularise the situation.
“We appreciate our course of action may not be welcomed by all, however, people should be given the facts of the situation. It is up to the individual if they choose to support or object to the operations of The Vestry.
“Based on feedback we have received, a number of residents are concerned with what is going on and are suffering negative impacts from the venue operating outside of their planning permission.
“Our letter is not a criticism of the council. We understand that enforcement action takes time and must follow due process.”
They dismissed any suggestion that the group was involved in some sort of ‘land grab’.
They added: “Our only aim is to have the venue operate in line with their permitted use and conditions imposed by their planning permission.”
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