Ms Fletcher wanted more than £40m in damages from the council but in his judgment, Mr Justice Supperstone described her evidence as “unsatisfactory”, said she had a “tendency to exaggerate” and he was not satisfied some of the conversations she repeated to the court had actually taken place.
Leeds City Council will now look to recover its £4m legal bill from Ms Fletcher who is understood to have run up costs of around £3m.
Ms Fletcher’s property company, Montpellier Estates, made accusations of fraud and dishonesty against senior council officers and former council leader Andrew Carter which were later dropped or dismissed.
Montpellier put forward a site known as ‘City One’ in a council competition to find a developer for the arena in 2007.
The council later cancelled the competition and developed the arena itself on the Claypit Lane site.
Council chief executive Tom Riordan said the case had been a “huge drain” on resources at a time when the authority has to make major savings and he was “delighted” the integrity of his staff had been vindicated.
Coun Carter said he was “extremely angry” that he and the council had been taken to court. “I never believed there were any merits in the case which has been hugely stressful for the council in general and for particular council officers.”
In a statement, Ms Fletcher said she was “surprised” at the judgment and was considering an appeal but remained “passionate about the city of Leeds”.
“Anyone who knew what went on in this Arena bid, will understand why we took this action against Leeds City Council,” she said.