Juanita Nielsen: mysteriously disappeared in July 1975.

Juanita Nielsen: Mysteriously disappeared in July 1975. Photo: Nigel McNeil

A Kings Cross brothel madam convicted of child prostitution offences had an unhealthy fixation with the entertainment strip's sordid history and believed the key to unlocking one of the strip's most enduring murder mysteries lay in her bordello, a court has heard.

In handing down a two-year suspended jail sentence on Jennifer Weatherstone on Monday, for hiring a 14-year-old girl to work in her brothel in 2011, Judge Robert Toner said the 50-year-old had made continual references at her trial to Juanita Nielsen, a Kings Cross newspaper editor who mysteriously disappeared in July 1975 after a long-running campaign against the controversial Victoria Point housing development.

''She consistently made reference to Juanita Nielsen and other celebrities and what she believed was contained, so I understand, in a room in the brothel,'' Judge Toner told Downing Centre District Court.

''She was intent on having the court, or the police, fully search the building, and particularly this room. I understand she believed they would find evidence of the remains of Juanita Nielsen and other relevant evidence.''

These comments were part of Weatherstone's ''preoccupation and beliefs about the underworld and Kings Cross culture'' that appeared to stem from a thought disorder, most likely based around the concept of persecution, the court heard.

Her ''delusions'' appeared to have become more pronounced since 2011, when the former book-keeper and one-time justice of the peace made the ''bizarre'' decision to buy the brothel.

''It is hard to see why she turned to this type of employment,'' the judge said.

''She doesn't appear to have any background in the sex industry.''

Judge Toner found that while Weatherstone's mental health was a mitigating factor to be taken into account in sentencing, it did not excuse her actions in hiring a teenager to work in the brothel.

The court heard that in 2011 a 14-year-old runaway referred to as CB came to the business, Sparkling Chandeliers, asking for work.

Weatherstone took on the girl without checking her identification and allowed her to have sex with two men, one of whom is understood to be in his 70s.

Weatherstone claimed the teenager had lied about her age, but Judge Toner found that she ''must have known, or should have known, she was underage'' and he rejected Weatherstone's defence's claim that her capacity to comprehend what she was doing had been restricted by her mental health.

''She went to work each day; she went home each day. The CCTV footage appears to show her going about her work as the person managing the business … and while her delusions sometimes got the better of her, she certainly knew what she was doing,'' the judge said.

''Young people need protection. This young lady, who had had a difficult life, was vulnerable. She needed a responsible person, such as the offender, to protect her. She needed the offender to say 'No, you'll not work in this brothel'.''

He said the nature of the offence warranted a two-year jail sentence but said it ought to be suspended because Weatherstone had no previous convictions, and to enable her to receive treatment for her mental condition.