Former hospital chief Rose Gibb has lost her bid for a £175,000 severance pay-off.

Miss Gibb sued the Maidstone and Tunbridge Wells NHS Trust for cash she says she was owed after she stepped down as its chief executive.

But today a judge ruled in favour of the trust, and said she will not receive the extra money.

Miss Gibb will also have to pay the trust's legal costs.

The judge refused her permission to appeal against his decision, which brings her bid for severance pay to an end.

Miss Gibb left the trust days before the Healthcare Commission published a report into 90 deaths linked to the C-diff bug between 2004 and 2006.

The trust faced questions over its management and the hygiene standards on its wards.

In a week-long hearing at the Royal Courts of Justice in January, Miss Gibb revealed that she had not wanted to resign.

She said she was convinced to leave, and was assured that approval had been given for a severance deal worth £250,000.

But on the day the Healthcare Commission's report was published, health secretary Alan Johnson intervened to block any payment.

In his ruling, Mr Justice Treacy found that the trust did not have legal powers to make the £250,000 deal which he described as "irrationally generous".

And he blamed Miss Gibb for not challenging the trust earlier, when she could have sued for unfair dismissal.

Miss Gibb had told the court that by the time the trust officially made her a new offer of just £75,000 - equivalent to six months pay - the three-month deadline to start unfair dismissal proceedings had passed.

But Mr Justice Treacy said Miss Gibb would have been aware that the trust was backtracking on the severance deal earlier, when Mr Johnson's intervened.

The judge said the fact the the deal was void "commences from the claimant's own failure to commence unfair dismissal proceedings in time when aware that the defendant [the trust] was refusing to honour the agreement on the grounds that it was ultra vires [outside its legal powers]".

Miss Gibb had claimed in court that she was told in a meeting in October 2007 that the £250,000 deal was "watertight". The judge said there appeared to be some confusion, but noted that the word did not appear in any minutes from that time.

But the judge did find that the trust was "reckless" in the statements made to Miss Gibb.

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~Audio: KM Group reporter Mary Graham say the court costs for Miss Gibb could reach £100,000>>>

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He said the reluctance of the trust's Non-Executive Directors to see their chief executive leave had "coloured their approach".

Referring to the Healthcare Commission's report, the judge said: "The trust was justified in regarding these findings as extremely serious. Miss Gibb, while not accepting the Commission's conclusions regarding failure to protect the patients' interests, acknowledged in her evidence that it was the worst failing that could be attributed to a trust.

"The Commission's recommendation that the trust board must review the leadership in the light of significant failings plainly included Miss Gibb as chief executive.

"In the light of the gravity of the outbreak of C-diff, the trust clearly felt it could not be seen not to have dismissed the chief executive prior to the publication of the report, which was inevitably going to attract a great deal of publicity."

Miss Gibb will only receive £75,000, in lieu of her contractual six-month notice period.

Relatives of those who died were delighted with the news.

Paul Wilson, whose mother Eileen, from Coxheath, died in April 2006, was in court to hear the judgement.

He said: "I am pleased but it should never have got this far. The judgement proved people can't get away with allowing these kinds of things to happen. She thought she was over and above everything. It has taken a judge to show the NHS that the people they are employing must respect the seriousness of their positions."

Jackie Stewart, whose mother Mary Hirst, from Bearsted, died of C-diff in 2006, said: "I always thought she would get something, so this is fantastic news."

Glenn Douglas, the trust's chief executive, said: “We welcome the court’s decision which supports the view of the trust and the NHS as a whole.

“This high profile case has been the cause of anxiety for many people and I hope this brings some comfort to them. It is the right decision.

“We would again like to publicly apologise for what happened during the C-diff outbreaks that occurred while Ms Gibb was chief executive of the trust.

“Under new management and with new procedures and strict infection control measures we have subsequently achieved some of the lowest infection rates in the country.

“Our priority is and will continue to be to provide safe, high quality care for our patients.”