These two houses, were built by Walter Fortune for Paul Francis Costelloe, real estate agent, in 1871.  Costelloe, himself, advertised: 

LAND for SALE. A beautiful SITE for two cottages, in that rising locality. SIMPSON-STREET, EAST MELBOURNE, having a frontage of 36ft. 6in. by 122ft. deep. Price, £6 12s. 6d. per foot. Title-Crown certificate. Apply to PAUL F. COSTELLOE, 2 Regent-Street, Victoria Parade. [Argus, 5 Jun 1871, p.8]

On 16 November the same year he gave notice to the Council that he would build ‘two small houses’ on the land. He called them Isabella Cottages, possibly after his wife, Sybella.  Costelloe rented the houses out to a regularly changing stream of tenants. 

In 1894 the Customs department was running a blitz on illicit whisky distillers, …

and last evening they made a seizure of considerable importance at a cottage, No 167 Simpson-street, East Melbourne. The cottage contains five or six rooms, and in general appearance it is much above the average of cottages inhabited by illicit whisky distillers. … [Fitzroy City Press, 27 Jul 1894, p.2]

Later, at the trial the police witness described how he had gone to the property …

and found a 50 gallon still, with rectifier, purifier, and cooler together with four vats capable of containing 300 gallons of wash. There were also found a coil of India rubber tubing and 70lb of brown sugar, besides compressed yeast, isinglass and essences for flavouring spirits. The still, in fact, was in complete working order and was fitted up alongside the kitchen fireplace so that the smoke from it might pass into the kitchen chimney. … [Argus, 31 Jul 1894, p.3]

The culprits were ‘two Germans’, named August Nickels and Carl Stohmeyer. Neither are listed as tenants either in the Post Office Directories or the Rate Books. Nickels was fined £150 or an alternative six months' imprisonment. It should be noted that at the time the Net Annual Value of the house was £32.  In other words, Nickels’ fine represented about five years’ rent. Stohmeyer was acquitted as there was no direct evidence against him. 

In 1895 Paul Costelloe, described as ‘a well-known estate agent, carrying on business for many years past at [72] Gore-street, Fitzroy’, committed suicide.  He had recently been declared insolvent and was due to meet with his creditors. The causes of the insolvency were given as ‘losses in business and depreciation in the value of real estate’. On the day of his death, he went to J. McEwan and Co., ironmongers, and paid 16s. 6d. for a British constabulary revolver and cartridges.  He then went to Spencer Street Station where he walked up and down one of the platforms in an agitated manner before sitting down, taking off his hat and shooting himself in the neck. 

The National Bank resumed the property and continued to rent it out, during which time there was further drama. In 1901 two women died in the Melbourne Hospital as a result of a fire at No 167. Between the daily papers and the coroner’s report the story emerged. Senior Constable McAlister claimed the tenant, whose name was either Florence Morrison or Flora Walker Warren, had ‘kept this home for immoral purposes for the last eighteen months’.  On the night of 1 September she was entertaining a regular visitor, Francis Clark Jones, in the front room when she decided to fetch an oil lamp from another room. Jones heard a noise, went to investigate and was confronted by two women on fire.  The second woman was 21 year-old Alma Harriett Steele, who, her sister said, was Mrs Morrison’s housekeeper.  She said that she was not well and suffered from ‘hysteria’.  What exactly had happened with the lamp remained a mystery and the deaths were deemed accidental. 

About 1908 the National Bank sold to Mary Ann Gartly, widow of Robert Gartly who had been manager of the wine and spirits department at The Mutual Store, the well known department store in Flinders Street.  She owned the two cottages until her death in 1937.  

The next owner was Mary Ann Lang Harkness, widow of Thomas Young Harkness, boot and shoe manufacturer.  She, unlike the previous owners, lived locally at 141 Powlett Street, the small block of flats on the corner of Powlett and Grey Streets.  Thomas Harkness built this block in 1928. The Harknesses had a long-standing association with East Melbourne previously building 57 Agnes Street, Jolimont in 1881.  Mary Ann died in 1946.  The property remained in the hands of her trustees until 1950 when it was sold. The cottages were bought by Teresa Mary Flanagan.