In a judgement that sets a precedent for the sex industry, the NSW Land and Environment Court has ordered the Tusculum Street "massage and masturbation" parlour, Misty's, to shut within four months after complaints by neighbours about late-night disturbances.

It was the first time the court has used its power to make an order under the recently enacted section 17(1) of the Restricted Premises Act . The section allows councils to apply to the court to have a brothel shut where it operates within view of a church, hospital or school and interferes with the public amenity.

Residents and students at the adjoining Catholic girls' boarding school, St Vincent's College, had frequently complained to City of Sydney Council about "antisocial behaviour including urinating, fighting, using offensive language, throwing rubbish and intimidating residents and students", said the court's chief justice, Brian Preston.

The operator of the brothel, Suzelle Antic, did not respond to a request for an interview yesterday. The Herald understands she plans to appeal against the ruling, which also ordered that her business pay the council's $60,000 legal costs.

The Lord Mayor, Clover Moore, said the decision was a warning to all rogue brothel operators.

More than 30 witnesses testified against the Potts Point brothel, which has boasted in advertisements that it has "50 Ladies! Now 10 rooms!"

They were supported by the Potts Point & Kings Cross Heritage Conservation Society president, Andrew Woodhouse, who said: "Brothel owners everywhere should be alert and alarmed about this. We're not against sex; we're for residents. This decision - a major first - potentially affects hundreds of brothels in the state."

Two private investigators hired by Misty's who gave evidence admitted to the court that they had seen groups of young men "smashing bottles on the road, hitting a road and traffic sign with a stick, urinating on trees in Tusculum Street, on nearby apartment block walls and even on the tyres of the private investigators' car."

Chief Justice Preston was unswayed by the opinion of a social planner, Dr Rigmor Berg, who argued the closure would mean that "in the short term, men would not be able to relieve their sexual frustration at Misty's."