Kirsha Kaechele's artwork at the museum she curates, which is owned by her husband David Walsh, may have had a point but violated the law, the Tasmanian Civil and Administrative Tribunal decision said on Tuesday.
The women-only, curtained off lounge now has 28 days to allow "persons who do not identify as ladies" access to the installation.
Ms Kaechele took to Instagram on Wednesday to say she was "saddened by the court's ruling against the Ladies Lounge".
View this post on Instagram A post shared by Kirsha Kaechele (@kirshakaechele)
"But, by grace of due process, I have been granted a 28-day period. This allows me space to absorb the situation, seek counsel and compose myself," she wrote.
"I am so grateful for your ongoing understanding and support through one of the most difficult periods of my life.
"Such periods can be painful, as many of us know."
The tribunal's deputy president Richard Grueber said the case involves conflict between an artwork "which deliberately and overtly discriminates for artistic purpose".
Jason Lau paid $35 to visit MONA in April 2023 and was not allowed behind the exhibit's curtain because he is a man.
"Mr Lau was not happy with being refused entry," agreed facts in his complaint of discrimination said.
It also notes the refusal to admit him was "part of the art itself" as it was a "participatory installation".
He missed out on seeing "a tethered, rearing, restrained-by-golden-chains-and-then-ultimately-defeated phallus" among other works including two Picasso paintings and a gold-jewelled crown Ms Kaechele wore at her wedding.
View this post on Instagram A post shared by emmabugg (@lady_emma_bugg)
The lounge idea came during the pandemic, partially in response to public criticism that there was not enough places to sit, and has a counterpart in the Ladies Lounge Designed by Men, which does not restrict entrants.
Ms Kaechele described the lounge she designed as a response to women being historically forbidden from certain spaces, citing elite men-only clubs as a contemporary example.
"However, the act does not permit discrimination for good faith artistic purpose per se," Mr Grueber said, noting aspects of the case "may seem paradoxical".
The lounge may well legally be able to operate as a women-only club, and its legitimate artistic purpose could have saved it running afoul of the law if it had offended, humiliated, or incited hatred or severe ridicule of Mr Lau, rather than discriminating against him based on gender.
Inconsistencies in the stated intention of the artwork prevented MONA establishing a relevant equal opportunity exemption for the Ladies Lounge.
"It may have a valid moral or ethical or pedagogical purpose, but it cannot reasonably be intended to promote equal opportunity," Mr Grueber said.
He ordered MONA cease the discrimination, whether by allowing men into the lounge or removing the exhibit, within four weeks.
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