44-year-old Patrick Watson, of Elm Close, Derry, admitted possessing an offensive weapon on July 16.
Derry Magistrate’s Court was told that police received a report of a man in the street with a hatchet.
When they arrived Watson admitted having had it and pointed it out to police. It was said he was "very intoxicated" at the time.
Defence counsel Nicola Rountree said that Watson’s neighbours had a continuous party from Saturday until Monday.
She said there were people in Watson’s garden and taxis calling continuously and that "he just lost his temper".
She added that he appreciated the seriousness of the offence and that it was "out of character for him".
District Judge Barney McElholm said that Watson had “a colourful early record” but nothing for some time.
He said that a party must have been annoying but told the defendant "you really can’t go around waving hatchets".
He imposed a conditional discharge for a period of two years.