They were seated outdoors by the red and gold sign, drinking wine, cutting into veal steak, casually waving to pedestrians passing on the Mid-Levels escalator. They were happy, content, sated with the delicious things of life. But like so many things in Hong Kong, that convivial story has come to an end. The al fresco diners of Cafe Gypsy have disappeared inside. Why? The Urban Services Department noticed that these diners seemed to be enjoying themselves. And in public, too. So the restaurateurs were told in no uncertain terms that outside eating was not allowed. It was probably under one of those obscure codicils proclaiming: 'Fresh air is bad for your health.' So exit al fresco dining. But hardly exit the restaurant, which is still wonderful. It's one of those tiny restaurants which can't be classified as bistro or auberge or bar or brasserie. Facing the escalator, Cafe Gypsy is light, breezy and informal. The place is an original. Managers Erwan Hebert and Laurent Genna encompass France, coming from Brittany and the Riviera respectively. The wine list is almost completely French, with nothing under $200. The incidental music is nearly 100 per cent guitar: leisurely French guitar, low-keyed flamenco guitar. The food, though, is Mediterranean. Like the atmosphere, it is light and beautifully prepared, an amalgam of French, Italian, Moroccan and Turkish cooking. Some dishes are standard, like ribeye beef with peppercorn sauce or the best-selling scallopini of veal. Others are extraordinary. We hadn't prepared for the size of the portions, but this made tasting all the better. I opted for a chicken liver salad, which came on a huge platter. Big chunks of soft chicken liver, resting on butter lettuce with a mild vinaigrette. The secret was in the thyme, parsley, and other green fresh herbs. Since the stuffed zucchini was sold out, my guest had the stuffed eggplant instead: bland and tasteless, it was the only disappointment of the evening. We shared the tagliatelle al pesto. The pasta may have been store-bought, but it was al dente, and covered with delicious pesto. There were only nine main courses (besides the blackboard specials). My oven-baked duck breast was nicely sliced, almost barbecue crisp on the outside, soft and tender inside. It was covered with a wonderfully fruity orange-and-sherry sauce. On the North African side, my guest had a Moroccan tangine. This is a stew, but one with a difference - pieces of New Zealand lamb cooked with chunks of eggplant dates and apricots. The latter, with its smell of the Saharan oasis, seduced us both. After all that who would have room for dessert, but how could one resist a strawberry-mint sorbet? Apparently nobody could, because they had run out. Instead I had a flourless chocolate and almond cake, which tasted like fudge brownie with chocolate sauce. My guest had the tiramisu, which he thoroughly enjoyed. But prices are not cheap. With a bottle of house wine, the bill came to over $1,000 for two. Noting that Cafe Gypsy was also a creperie, I went back the following afternoon to sample one of the six varieties of crepes: Crepe Amadine. This could have been Spanish or Moroccan, made with almonds, honey and lemon. As for those hungering for a view of the skies, walk across to the century-old mosque. This is charming and quaint, a lovely blue traditional structure with a small garden, and under a full moon, it is a sight which complements the meal. CAFE GYPSY 29 Shelley Street, by Mosque Junction exit of Mid-Levels escalator; Tel: 2521-0000; Open: Noon-5pm, 7-10,30pm; open 10am-5pm, 7-11pm weekends (close 10pm Sundays)