Gobbo had originally sought at least $800,000 in damages from the state of Victoria over claims she was groomed by police to become a human source in late 2005.
Her claim was dismissed by the Victorian Supreme Court in June 2025 but she challenged the ruling in the Court of Appeal.
The court on Friday refused her leave to appeal the decision and the case was thrown out.
"The judge's conclusion that (Ms Gobbo) failed to establish that any of those police officers breached the duty of care they owed ... was correct," the judgment read.
Gobbo had claimed police exploited her vulnerabilities and distress due to close ties to gangland figures, including Tony Mokbel.
She said they offered her protection and support, and promised to hide her identity in exchange for information on her gangland clients.
But her cover was blown in March 2019 when she was exposed as "Informer 3838" and "Lawyer X".
Justice Melinda Richard in June 2025 found only four of the 10 officers who were being sued actually owed Gobbo and her children a duty of care.
But she determined the state could not be held liable because once Gobbo agreed to become an informer, exposure was an inherent risk.
In their written judgment, appeal court president Justice Karin Emerton and Justices David Beach and Susan Kenny found the officers who owed Ms Gobbo a duty of care did not breach that duty.
Given her experience working as a criminal barrister for underworld figures, Ms Gobbo also would have been well aware of the risk she was entering into, the judges found.
"It cannot be doubted that ... Ms Gobbo had full knowledge of the nature and extent of the risk involved in becoming a police informer against serious criminals,' the judgment stated.
"On the whole of the evidence, it could not be concluded that Ms Gobbo positively believed that the relevant risk of harm would not materialise."
The court refused Ms Gobbo leave to appeal and ordered her to pay the state's legal costs.
Ms Gobbo signed the bar roll at age 25, becoming the youngest woman in the state to do so, and quickly found herself representing gangland clients, including the Mokbel family and Carl Williams' clan.
A royal commission found her position as both an informer and a barrister could have affected more than 1000 convictions.
Former clients Mokbel, Faruk Orman and Zlate Cvetanovski have successfully had convictions overturned since her role was uncovered in March 2019.
In 2010, Ms Gobbo sued Victoria Police, claiming they failed to protect her as a witness and settled out of court for almost $3 million.
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