Christchurch City Council is considering legal action against a funeral operator over its plans to run services from a home in a residential area.
Bell, Lamb & Trotter Funeral Directors was initially turned down by the council.
However, the operator got the green light from an independent commissioner after finding a clause in new planning rules that allowed small businesses to be run from people's homes.
Councillor Raf Manji said, because of this, the council's options were now limited.
Its staff were exploring options including a possible judicial review of the decision, he said.
There was no requirement under the planning rules for operators to consult with residents.
The matter has attracted attention at the highest levels, including that of local MP and newly appointed Foreign Affairs Minister Gerry Brownlee.
He said the commissioner had failed in its duty and he was one of those pushing for a judicial review.
'You come home to enjoy your property'
Fendalton resident Victoria Georgiou said having mourners coming and going from her street would require her and her neighbours to alter their behaviour out of respect for the dead.
This was not something she was looking forward to.
"What's the difference, if it's a knock shop or a funeral parlour or a takeaway bar. You come home to enjoy your property with your friends and family, not to have to deal with the carryings on of life."
She questioned why Bell, Lamb & Trotter was looking to set up a funeral parlour in the upmarket neighbourhood.
"I don't see what they're trying to achieve by being here. They're trying to capture a Fendalton market? I mean that's just insane. They're also trying to create some exclusivity. When you're dead you're dead, it doesn't matter where you are. It's just silly."
Another resident, Peter Law, said the street was not suited to commercial activities, especially of the sort being proposed.
"The nature of the business has got something to do with it as well, especially from the cultural point of view and from the point of view of people who are apprehensive about death, don't like the idea of death coming into their street.
"I mean we're all going to die, but in our street, regularly, is a bit difficult."
The operator would have to comply with a condition to restrict numbers at its services to no more than 10.
But a third resident, Simon Trotter, said even this number of people would be too many for the street.
"It's a fairly narrow sort of travel area.
"It's already a reasonably busy part of town, it's associated with Christchurch Boys' High School across the road here."
The council needed to take a hard look at the planning rules that had allowed this development to slip through, Mr Trotter said.
The owner of the business and the home where the funerals would be held, Andrew Bell, had not yet returned RNZ's calls.