Sister Bella, tucked off Lonsdale Street, was found to have rodent droppings throughout its kitchen, on benches, food preparation equipment and in utensil drawers, Melbourne Magistrates Court heard on Thursday.

Besides being a haven for rodents, the kitchen also had holes in walls and floors, had filthy floors, greasy walls and equipment, a sink without soap and paper towel, and unsealed bags of food, the court heard.

The bar was closed for three weeks in April 2014 when City of Melbourne inspectors found the kitchen in a filthy state, prosecutor Andrew Sim told the court. The inspectors also found food particles littered through the kitchen and two dead mice on the floor.

Rodent droppings (circled) found by health inspectors inside a utensil drawer in the kitchen of Sister Bella. Photo: supplied

Jerome Borazio's company, Sister Bellas, which owned Sister Bella at the time but sold the bar last year for $75,000, was on Thursday convicted and fined $40,000 after pleading guilty to 10 charges under the Food Standards Act.

Mr Borazio, who owns a handful of bars in Melbourne and also runs the city's popular Laneway Festival, was initially not in court but attended – in shorts and thongs – when magistrate Peter Reardon ordered the defence lawyer to contact his client.

Mr Reardon said the bar was a health hazard to customers at the time, and the proximity of rubbish bins outside meant rodents would have been an obvious problem.

Hygiene laws put the onus on bars to keep venues clean for customers, he said.

"The fact is that if you want to open and run a grungy bar and restaurant, it doesn't mean the customers have to eat like alleycats," Mr Reardon said.

"Looking at these photographs it's incredible that anyone could unlock the door and turn a blind eye." Sister Bella reopened on May 1, 2014, when council inspectors found the hygiene problems had been addressed. The bar changed hands in November last year.

Defence counsel John Larkins described the outcomes of the inspections as "appalling" and a "lamentable situation".

Mr Borazio was overseas a lot at the time of the inspections and had little to do with running the bar, Mr Larkins said, but had to accept responsibility.

"The buck stops with him," he said.

The owner had relied on a management team to run Sister Bella, Mr Larkins said, but "his faith was clearly misplaced".

Sister Bellas must also pay $10,000 in court costs. Mr Borazio also faces charges under the Food Standards Act but it is expected they will soon be dropped.

His company had faced potential fines of up to $1.25 million.