The Lawyer Who Betrayed Her Clients: Nicola Gobbo Loses Final Compensation Appeal Against Victoria

The Victorian Court of Appeal's refusal to grant Nicola Gobbo leave to appeal the dismissal of her compensation claim against the State of Victoria marks a decisive chapter in one of the most extraordinary legal sagas in Australian history.

Gobbo, a former criminal barrister who secretly became a police informer while representing some of Melbourne's most dangerous underworld figures, had sought at least $800,000 in damages from the state.

Her claim alleged that police groomed her into becoming a human source in late 2005, exploited her emotional vulnerabilities and distress arising from her ties to gangland figures, offered her protection and support, and promised to conceal her identity in exchange for confidential information about her own clients.

The Court of Appeal's ruling, delivered by President Karin Emerton alongside Justices David Beach and Susan Kenny, found that the officers who owed Gobbo a duty of care did not breach that duty, effectively closing the door on her pursuit of state compensation.

The legal reasoning underpinning this decision rests on a deeply uncomfortable proposition: that Gobbo, given her extensive experience as a criminal barrister representing underworld figures, fully understood the nature and extent of the risk she was undertaking when she agreed to inform on serious criminals.

The judges concluded that the evidence did not demonstrate she positively believed the relevant risk of harm would not materialise. This finding carries profound implications for how courts assess professional agency, informed consent, and state liability when individuals with specialised legal knowledge enter into covert arrangements with law enforcement.

The court also ordered Gobbo to pay Victoria's legal costs, compounding the financial consequences of her failed litigation and reinforcing the judiciary's reluctance to extend compensation to those whose own professional judgment contributed to their predicament.

Beyond the courtroom, the Gobbo affair has exposed systemic failures within Victoria Police's handling of informants and raised searching questions about the integrity of the criminal justice system. When her role as "Informer 3838" and "Lawyer X" became public in March 2019, a royal commission subsequently found that her dual position as informer and barrister could have affected more than 1,000 convictions.

Former clients including Tony Mokbel, Faruk Orman, and Zlate Cvetanovski have already had convictions overturned. This case therefore transcends one woman's compensation claim, touching the very foundations of legal ethics, prosecutorial conduct, and the state's obligation to protect those it recruits into dangerous covert roles.

TL;DR The Victorian Court of Appeal has refused Nicola Gobbo leave to appeal the dismissal of her $800,000 compensation claim against the State of Victoria, ordering her to pay the state's legal costs. The court found that officers who owed her a duty of care did not breach it, reasoning that Gobbo, as an experienced criminal barrister, fully understood the risks of becoming a police informer against serious criminals. Her exposure as "Informer 3838" in 2019 triggered a royal commission that found her dual role could have affected over 1,000 convictions, with several former clients already having convictions overturned. The ruling underscores the judiciary's stance on professional agency, informed consent, and state liability in covert informant arrangements.

The Legal Architecture of the Gobbo Compensation Ruling

The Court of Appeal's decision represents the culmination of a protracted legal battle that began when Gobbo filed her compensation claim against the State of Victoria. Her argument centred on the proposition that police had groomed her into becoming a human source, exploiting her vulnerabilities and distress arising from her connections to gangland figures.

She contended that officers offered her protection and support while promising to conceal her identity in exchange for information about her clients. The Victorian Supreme Court dismissed this claim in June 2025, and the Court of Appeal has now affirmed that dismissal, refusing leave to appeal and imposing costs against her.

Justice Melinda Richard's Original Findings

In the June 2025 Supreme Court decision, Justice Melinda Richard found that only four of the ten officers Gobbo was suing owed a duty of care to her and her children.

Critically, the judge determined that the state was not liable because, once Gobbo agreed to become an informer, exposure was an inherent risk of the arrangement. This finding established the foundational principle upon which the Court of Appeal subsequently relied: that informed adults who voluntarily enter into covert arrangements with law enforcement cannot later claim compensation for the foreseeable consequences of those arrangements. The judgment effectively placed the burden of risk assessment squarely on Gobbo's shoulders.

Justice Richard's reasoning reflected a careful balancing of competing considerations. On one hand, the court acknowledged that police owe certain duties to informants they recruit, particularly regarding protection and confidentiality.

On the other hand, the court recognised that the state cannot be held liable for every adverse outcome that befalls an informer, especially when that informer possesses sophisticated legal knowledge.

The finding that only four officers owed a duty of care narrowed the scope of potential liability significantly, and the determination that no breach occurred further insulated the state from financial responsibility.

The Court of Appeal's Unanimous Decision

The appellate bench, comprising President Karin Emerton and Justices David Beach and Susan Kenny, unanimously upheld Justice Richard's conclusions. They found that the officers who owed Gobbo a duty of care did not breach that duty, a finding that rested heavily on Gobbo's professional background.

The judges emphasised that Gobbo, given her experience as a criminal barrister for underworld figures, would have been acutely aware of the risk she was taking. This reasoning transforms her professional expertise from a shield into a sword, using her legal knowledge as evidence that she understood and accepted the dangers inherent in her informant role.

The court further noted that the evidence did not show Gobbo positively believed the relevant risk of harm would not occur. This subtle but crucial distinction addresses the psychological dimension of risk assessment.

Had Gobbo genuinely believed she would remain safe despite the obvious dangers, she might have had a stronger argument that police misled her. Instead, the court found no evidence of such a belief, suggesting she proceeded with open eyes and full comprehension of the potential consequences. The order that she pay Victoria's legal costs adds a punitive dimension to the ruling.

The Doctrine of Inherent Risk in Covert Informant Arrangements

Central to the Court of Appeal's reasoning is the doctrine of inherent risk, a legal principle that holds individuals accountable for foreseeable dangers they voluntarily assume. The court determined that once Gobbo agreed to become an informer, exposure was an inherent risk of the arrangement.

This finding carries significant implications for how courts will assess future claims by informants, undercover operatives, and others who enter into covert relationships with law enforcement. The doctrine effectively creates a high bar for compensation, requiring claimants to demonstrate not merely that harm occurred, but that the state breached a specific duty owed to them.

Professional Knowledge as a Liability Shield

The court's emphasis on Gobbo's professional background as a criminal barrister represents a novel application of the inherent risk doctrine. By highlighting her experience representing underworld figures, the judges constructed a narrative in which Gobbo possessed superior knowledge of the dangers she faced.

This reasoning suggests that professionals with specialised expertise may be held to a higher standard of risk awareness than ordinary citizens. The implication is that the more you know, the less you can claim ignorance when things go wrong, a principle that could have far-reaching consequences beyond the informant context.

This approach raises uncomfortable questions about the state's obligations to those it recruits into dangerous roles. If professional knowledge absolves the state of liability, does that mean police can recruit lawyers, doctors, or other professionals with less concern for their safety?

The court's reasoning suggests that sophisticated individuals are expected to protect themselves, a position that may prove controversial among legal ethicists and civil liberties advocates. The ruling effectively shifts responsibility from the state to the individual, privileging contractual autonomy over paternalistic protection.

The "Positive Belief" Standard and Its Limits

The court's finding that the evidence did not show Gobbo positively believed the relevant risk of harm would not occur introduces a subjective element into the liability analysis. This standard requires claimants to demonstrate not just that they faced danger, but that they genuinely believed they would be safe.

Such a belief would suggest that police misled them or created a false sense of security. In Gobbo's case, the court found no evidence of such a belief, implying she proceeded with full awareness of the risks and cannot now claim she was deceived about the dangers she faced.

This "positive belief" standard creates a challenging evidentiary hurdle for future claimants. Proving what someone believed at a particular moment, especially in the context of covert arrangements where documentation is limited, presents significant difficulties. The standard also raises questions about the psychology of risk assessment.

People often engage in optimistic bias, believing they will avoid negative outcomes even when they acknowledge statistical dangers. The court's approach may penalise this very human tendency, requiring claimants to prove they were uniquely naive rather than ordinarily optimistic.

The Royal Commission and Its Staggering Findings

The legal proceedings against Gobbo cannot be understood in isolation from the broader institutional reckoning triggered by her exposure. When her role as "Informer 3838" and "Lawyer X" became public in March 2019, the revelation sent shockwaves through Victoria's criminal justice system.

A royal commission was established to investigate the matter, and its findings were nothing short of devastating. The commission determined that Gobbo's dual position as both informer and barrister could have affected more than 1,000 convictions, a figure that underscores the systemic nature of the problem and the potential scale of the miscarriage of justice.

The Human Cost: Overturned Convictions

The royal commission's findings have already had tangible consequences for individuals convicted on evidence tainted by Gobbo's dual role. Former clients Tony Mokbel, Faruk Orman, and Zlate Cvetanovski have all had convictions overturned since her role was revealed.

These men, some of whom spent years in prison, have had their lives irrevocably altered by the revelation that their own lawyer was simultaneously working as a police informer against them.

The overturned convictions represent not merely legal technicalities but profound failures of the adversarial system, which depends on defence lawyers providing undivided loyalty to their clients.

The human dimension of this scandal extends beyond those whose convictions have been overturned. Families, communities, and the broader public have had their faith in the justice system shaken by the revelation that a barrister could operate as an informer while representing clients.

The royal commission's finding that over 1,000 convictions could be affected suggests that the true scale of the miscarriage may never be fully known. Each affected conviction represents a potential wrongful imprisonment, a life disrupted, and a trust betrayed. The compensation claim, while significant in its own right, pales beside this broader institutional failure.

Institutional Failures and Accountability

The royal commission's findings also raised searching questions about Victoria Police's conduct and the adequacy of oversight mechanisms governing the use of informants. How could a practising barrister operate as an informer for years without detection? What safeguards failed, and who bears responsibility for those failures?

The commission's report likely addressed these questions, but the Court of Appeal's decision suggests that legal accountability, at least in the form of compensation, remains elusive. The state has successfully defended its conduct, leaving Gobbo to bear the financial consequences of her failed claim while the broader institutional questions remain unresolved.

This asymmetry between institutional accountability and individual responsibility lies at the heart of the controversy. The state can acknowledge systemic failures through royal commissions and policy reforms while simultaneously denying financial responsibility to those harmed by those failures.

Gobbo, whatever her own culpability, becomes the public face of a scandal that implicates far more powerful institutions. The Court of Appeal's decision reinforces this asymmetry, using her professional knowledge as a shield for the state while leaving her to bear the costs of litigation that sought to hold that state accountable.

Professional Ethics and the Lawyer-Informer Paradox

The Gobbo affair exposes a fundamental paradox at the intersection of legal ethics and law enforcement: can a lawyer simultaneously serve two masters, the client and the state, without betraying one or both?

Gobbo's dual role as barrister and informer violated the most basic tenets of legal ethics, which demand undivided loyalty to the client. Yet the Court of Appeal's decision focuses not on this ethical breach but on Gobbo's own risk assessment, effectively sidestepping the question of whether the state should have recruited her in the first place. This omission leaves unresolved the deeper ethical questions raised by her case.

The Duty of Loyalty and Its Violation

The lawyer-client relationship is founded on trust, confidentiality, and loyalty. Clients must be able to speak freely with their legal representatives, secure in the knowledge that their confidences will not be shared with third parties, least of all the police.

Gobbo's role as an informer shattered this trust, potentially exposing her clients to prosecution based on information they believed was protected by privilege. The royal commission's finding that over 1,000 convictions could be affected underscores the scale of this betrayal.

Yet the Court of Appeal's decision does not address this ethical dimension, focusing instead on Gobbo's own professional knowledge and risk assessment.

This omission is significant because it leaves the ethical questions unresolved. If Gobbo's conduct was unethical, and the royal commission's findings suggest it was, then the state's decision to recruit and use her as an informer raises serious questions about law enforcement's willingness to exploit unethical arrangements.

The Court of Appeal's decision, by focusing on Gobbo's knowledge and risk, implicitly accepts the state's conduct as lawful, even if ethically questionable. This distinction between legality and ethics lies at the heart of the controversy, and the court's failure to address it leaves a troubling gap in the jurisprudence.

Implications for Future Informant Arrangements

The Court of Appeal's decision sends a clear message to potential informants: if you have professional knowledge of the risks, you bear responsibility for the consequences. This message may deter lawyers, doctors, and other professionals from cooperating with law enforcement, potentially depriving police of valuable intelligence.

Alternatively, it may encourage police to seek out such professionals, knowing that their expertise will shield the state from liability. Either way, the decision reshapes the incentives governing informant arrangements, with consequences that may only become apparent in future cases.

The ruling also raises questions about the adequacy of oversight mechanisms governing police use of informants. If the state can recruit a practising barrister without triggering effective oversight, what other arrangements might escape scrutiny? The royal commission's findings suggest that existing safeguards failed spectacularly in Gobbo's case.

The Court of Appeal's decision does nothing to address these systemic failures, focusing instead on the individual claim before it. This narrow focus leaves the broader institutional questions unanswered, ensuring that the Gobbo affair will continue to generate controversy and debate.

The Financial Aftermath and the 2010 Settlement

The financial dimensions of the Gobbo affair extend beyond the failed compensation claim and the costs order imposed by the Court of Appeal. In 2010, Gobbo sued Victoria Police, claiming it failed to protect her as a witness.

That case was settled out of court for almost $3 million, a substantial sum that underscores the seriousness with which the state viewed her claims at the time. The contrast between that settlement and the current litigation is striking: in 2010, the state was willing to pay nearly $3 million to resolve Gobbo's claims; in 2026, it successfully defended against her claim for at least $800,000 and secured a costs order against her.

Understanding the Costs Order

The Court of Appeal's order that Gobbo pay Victoria's legal costs adds a significant financial burden to her failed litigation. Legal costs in appellate proceedings can easily run into hundreds of thousands of dollars, potentially exceeding the $800,000 she originally sought.

This costs order serves both a compensatory function, reimbursing the state for its legal expenses, and a deterrent function, discouraging similar claims by other potential litigants. For Gobbo, the costs order may prove more financially devastating than the dismissal of her claim itself, transforming her legal defeat into a potentially ruinous financial liability.

The costs order also raises questions about access to justice. If individuals who challenge state conduct face the prospect of paying the state's legal costs when they lose, many will be deterred from bringing legitimate claims.

This chilling effect may be particularly pronounced in cases involving covert arrangements, where the imbalance of resources between the individual and the state is already substantial. The Court of Appeal's decision thus has implications beyond Gobbo's case, potentially shaping the landscape of future litigation against the state.

The Broader Financial Context

The nearly $3 million settlement in 2010 and the failed $800,000 claim in 2026 bookend a period of intense legal and public scrutiny of Gobbo's activities. The state's willingness to settle in 2010, before her role as an informer became public, contrasts sharply with its vigorous defence of the current claim.

This shift reflects both the changed legal landscape and the state's assessment of its exposure. Once the royal commission exposed the full extent of Gobbo's dual role, the state's litigation strategy hardened, culminating in the Court of Appeal's decisive rejection of her claim.

The financial consequences for Gobbo extend beyond the courtroom. Her legal career is in ruins, her reputation irreparably damaged, and her financial future uncertain. The costs order may force her into bankruptcy, adding a final indignity to a saga that has already exacted a heavy personal toll.

Whether this outcome serves the interests of justice is a question that will continue to be debated, particularly given the royal commission's findings about the systemic failures that enabled her dual role in the first place.

Lessons for Legal Systems and Law Enforcement

The Gobbo affair offers profound lessons for legal systems and law enforcement agencies worldwide. At its core, the case demonstrates the dangers of allowing lawyers to operate as informers, a practice that fundamentally undermines the lawyer-client relationship and the integrity of the adversarial system.

The royal commission's finding that over 1,000 convictions could be affected illustrates the staggering scale of the potential damage. Legal systems must develop robust safeguards to prevent similar situations, including clear prohibitions on recruiting lawyers as informers and effective oversight mechanisms to detect violations.

Reforming Informant Recruitment Practices

Law enforcement agencies must reconsider their informant recruitment practices in light of the Gobbo affair. The recruitment of a practising barrister should have triggered immediate red flags, yet the arrangement continued for years without effective intervention.

Agencies need clear policies prohibiting the recruitment of lawyers, judges, and other professionals whose roles are incompatible with informant status. They also need robust oversight mechanisms to ensure compliance and to detect violations before they cause widespread damage.

The costs of failing to implement such safeguards, as the Gobbo affair demonstrates, are measured not just in dollars but in miscarriages of justice and eroded public trust.

The Court of Appeal's decision, by focusing on Gobbo's individual responsibility, may inadvertently discourage agencies from implementing systemic reforms. If the state can successfully defend against compensation claims by arguing that informants understood the risks, the financial incentive to prevent problematic arrangements diminishes.

This dynamic underscores the importance of regulatory reform that does not depend on litigation to drive change. Legislatures and oversight bodies must act proactively to prevent future Gobbo-style scandals, rather than relying on courts to impose accountability after the fact.

Restoring Public Trust

The Gobbo affair has damaged public trust in Victoria's criminal justice system, and restoring that trust will require more than legal rulings. The royal commission's findings provided a comprehensive account of what went wrong, but accountability remains incomplete.

The Court of Appeal's decision, while legally sound, may be perceived as protecting the state at the expense of an individual who, whatever her faults, was arguably exploited by the very institutions that should have protected her.

Restoring trust will require transparency, accountability, and meaningful reforms that address the systemic failures the royal commission identified.

Ultimately, the Gobbo affair serves as a cautionary tale about the dangers of compromising legal ethics in the pursuit of law enforcement objectives. The state's decision to recruit a practising barrister as an informer set in motion a chain of events that has damaged countless lives, undermined over 1,000 convictions, and cost millions of dollars.

The Court of Appeal's decision closes one chapter of this saga, but the broader questions it raises about legal ethics, state accountability, and the integrity of the justice system will continue to demand answers.