AH Michelle's! Everybody knows Michelle's. Its the place at the top of Wyndham Street, and its owner, Michelle Garnaut, is regarded by many as the best young restaurateur in town. Her upstairs Mediterranean-style restaurant has been voted best overall restaurant for the second consecutive year in the food magazine Epicure. Governor Chris Patten goes there, as does nearly everyone else in town with clout. Obviously, they go for the food, which is imaginative and fresh, if expensive. And they come for the atmosphere. Michelle's at the Fringe is a very unusual place. It is hip with its ragged terracotta, yellow and green walls, but timeless with its big flower arrangements, secondhand flatware and unexpectedly comfortable chairs, in the shape of violins. There are other novelties too. It has windows which open and shut, and ''roolly trooly'' natural light, as a customer was overhead to say during lunch this week. But back to the food. You enter Michelle's through a single door at street level. The only indication that you are in the right place is the framed place setting that hangs on the wall opposite the entrance. After hiking up two flights of stairs, a long narrow room is revealed, flooded with gentle yellow light, with a turn-of-the-century fireplace as its focal point. The marble and wood varnished bar snakes off into a corner towards the kitchen and the main waiter's island is a big table set with flowers, trays of secondhand ivory, bone and silverplated cutlery and two fat wax candles. Oddly, there is very little noise from the traffic outside, and the simply-set tables have no silly tat on them. But let's get serious. At 9pm, pre-dinner drinks seemed like too much messing about, and we settled for a glass of the house white - a 1992 Angoves Sauvignon Blanc from South Australia at $42 a glass. Could the quality-conscious patronne come up with a wine that did not tear apart either the gut or your bank balance? She had. It was little sharp on the palate but eminently drinkable at $185 a bottle. Food was more difficult. The menu is not big and there is nothing much to tempt a steak and potatoes man. It is all sauteed, steamed, charcoal-grilled, intricately chopped and delicately garnished. At lunch there is a choice of the light lunch of one course, juice and tea or coffee ($98); two-courses in any combination ($134) and three for $158 (excluding 9.5 per cent service charge). Dinner is a la carte with a completely different menu. Starters had names like Tuna in the Casbah, on a radish and orange salad with spiced walnut paste ($78), nettle pasta with artichokes, lemon and cream ($82) and Caesar conquered the Salad (at $78 Paul the waiter told us it was huge) but we settled for a vegetable terrine ($80) to share. Essentially, it was a tart shaped by wine leaves and koka, and filled with a coarse textured terrine. There was homemade tomato jelly dribbled over it, and you feel the goodness. MAIN courses included roasted garlic lamb with ratatouille ($164), the confit of Duck with succotash ($162) and the snapper with citrus hollandaise and potato roesti ($158). We chose a favourite calves' liver ($164) and a layered pie of eggplants, filo and walnuts ($158). The BBQ calves' liver was disappointing with its wafer thin parsnip chips. In my book, it is gut-sticking food for hungry people. I would have like a bigger helping and another vegetable, or more parsnip chips for the price. The pie was better and it looked delicious. Lots of orange and red and olives and a generous dose of walnuts. The traditional Middle Eastern salad of cucumbers and yoghurt was served on the same plate and dribbled nice and messily into the pie. Again, a bit bigger would have been more beautiful. The desserts. Well the desserts. Focaccia baked with figs and grapes comes with marscarpone cheese and plum jelly ($62) looked gorgeous at the next table. Of chocolate ($68) which consisted of a cake, a mousse, a souffle and an ice cream, it made up for the calves' liver. The mousse melted in your mouth, the cake was dense with real chocolate and the ice cream was homemade. The lemon curd cake ($66) was loaded with a real lemon sauce, nice and tart, that was seeping its way through a light sponge-style cake. The coffee (expresso and cappuccino $30 per cup) with a gutsy Mediterranean oomph to them, went down a treat. Last orders are about 10pm but they will wait for you, if they know you are coming, Paul, our casual but solicitous waiter said when he presented us with the bill of $1064 for two, including service. Was it worth it? As a regular said later, when the cost of the meal was being discussed. ''You know a place like Michelle's is unique. If it was in New York or somewhere like that, we couldn't afford it. The whole thing is so professional. Done with love.'' Michelle's at the Fringe, 2 Lower Albert Road, South Block, Central. Tel: 877 4000; fax, 877 0135. Lunch: Noon-2.30pm; dinner, 7-10pm; closed Sundays.