The parents of Madeleine McCann were last night 'bitterly disappointed' after losing their eight-year libel battle against a former police chief who accused them of hiding their daughter's death.

The couple learned the "devastating news" on the eve of their younger twin children's 12th birthdays.

They are tomorrow due to be celebrating Sean and Amelie's special day.

The long-suffering family could now face financial ruin as they face paying Goncalo Amaral's huge court costs and could be sued themselves by the former policeman.


Judges ruled Amaral's "exercise of his freedom of expression was not considered abusive" and "was within admissible limits in a democratic and open society, which excludes the illegality of possible damage to the honour of the McCanns."

The couple had won 500,000 euro (NZ$739,000) damages from their tormentor, whom they branded "a poisonous liar" but, under Portuguese law, this was never handed over to them while proceedings were ongoing.

The payout would have been added to the official Find Maddie Fund set up through public donations and boosted by big-hearted celebrities to finance the worldwide hunt for the missing girl.

The Fund once stood at £1million but is now closer to £300,000 (NZ$516,000) and could be wiped out by the Portugal's Supreme Court shock ruling.

A source close to the family said: "It's not good news. We just don't know what to do but we need to sit down with our lawyer and discuss it.

"We've gone to the pinnacle of the Portuguese legal system and we've lost. We now have to pay a sizeable amount in costs."

As the Scotland Yard search for Madeleine - who disappeared as a three-year-old from a holiday apartment in the Algarve's Praia da Luz - is being wound down the McCann's had been keeping the soon-to-be-obliterated fund as a life-line to pay for their own ongoing search the moment the investigation, codenamed Operation Grange, ends.

A close family friend said: "This news is devastating, not just for Kate and Gerry but for Madeleine wherever she is."

Ex GP Kate and heart doctor Gerry, both 48, from Rothley, Leicestershire, live in hope that "a miracle" will one day reunite them with their daughter. If still alive, she will turn 14 in mid May.

The appeal hearing in Lisbon which ruled against the McCanns was held in private.

The couple's lawyer Isabel Duarte had not even been informed it was happening until after the event.

A spokesperson from her office in the Portuguese capital said: "This is a big disappointment and very bitter for us and for Mr and Mrs McCann.

"We know the libel decision has gone against us but we do not know the basis of the ruling and will not find out until Thursday."

Duarte, who was away on business in the North of the country, had not been made aware, her colleague George no surname given said.

He explained: "The Supreme Court meet to consider their ruling and make a decision and do not have to inform either party. Isabel was not there and neither was Amaral.

"We are disappointed and will be making our comment on the basis of the ruling when we have it."

Amaral, 56, who the McCanns first sued for libel June 2009, won the lengthy legal fight after judges decided he had the "Right to freedom of expression".

Madeleine's parents could now lodge an appeal to the highest court in the land, the European Court of Human Rights.

But a source close to the exasperated couple said: "I think the fight is finally over. They want to concentrate on finding Madeleine and don't think they have the time or energy to lodge yet another appeal."

Amaral, who led the initial bungled search to help find their daughter, claimed in a once-banned book that Madeleine was dead.

He was later sacked for criticizing the British police handling of the case.

He has since made a fortune from his best-seller The Truth of the Lie in which he claims Madeleine is dead and her parents "staged a cover up".

It has been translated into six languages and sold hundreds of thousands of copies worldwide.

It led to libel action from the distraught McCanns and action in a civil court, an appeal court and finally the Supreme Court.