A PUB bet of £2,000 over a man undergoing sex change treatment sparked a midnight mugging, a court was told yesterday.

Katarina Gillham, 26, who was formerly called Stephen, was followed out of the bar by Ian Galvin and forced to hand over a mobile phone and £7 cash, it was alleged.

Miss Gillham told police that Mr Galvin threatened to kill her and said she had caused him to lose a £2,000 bet.

Miss Gillham, who was having a sex change, had been a target for abuse earlier that night over her female appearance in the Penny Gill pub in Spennymoor, County Durham, said Stephen Duffield, prosecuting.

Mr Galvin, whom she had met casually a week before, later told police that Miss Gillham owed him £30 over a drugs deal, and he took the phone and cash as security.

But Miss Gillham, wearing a tight black top and black trousers with black nail varnish, told Teesside Crown Court: "He mentioned something about a bet and losing £2,000 but I did not understand what he meant.

"When I was in the pub I went into the ladies toilets a couple of times to use the mirror.

"But I left after one of the barmaids said that people were unhappy about me using the ladies."

Mr Galvin, 32, of Murray Avenue, Bishop Auckland, County Durham, pleads not guilty to theft and making a threat to kill on December 15.

The case continues.