The plaintiff commenced proceedings in the District Court of New South Wales against the State of New South Wales (Department of Education) and Ricky Joseph Vella claiming damages for personal injuries  arising from sexual abuse that Vella had perpetrated against her. The conduct partly occurred when the plaintiff was a student and Vella was her year 5 classroom teacher in 2000. It also continued throughout 2001 and 2002, after the plaintiff had left the school, as Vella provided private tutoring at the plaintiff's family home and through outings that he had with the plaintiff outside of the school environment.

The plaintiff sued the State on multiple bases: vicarious liability for conduct of its employees; breach of a non-delegable duty of care owed to students attending schools operated by the State; and negligence. She also sued Vella for the sexual abuse perpetrated against her, which constituted the torts of battery and assault. The State commenced a cross-claim against Vella seeking a complete indemnity, damages for breach of contract including for its costs of defending the plaintiff’s claim against it, interest and costs.

Vella, who is incarcerated for sexually abusing the plaintiff and others, terminated his legal retainer and ceased ‘attending’ Court. He maintained a denial that the abuse or any battery had occurred but ‘without admission’ accepted liability by reason of the convictions entered against him.

On the second day of the hearing, judgment was entered by consent for the plaintiff against the State in the sum of $755,000 (inclusive of costs fixed at $275,000), in full and final satisfaction of her claim against the State. The State maintained its cross-claim against Vella.

Because the consent judgment was only prima facie evidence of the State’s liability, the State was required to establish on the cross-claim that it would in fact have been held liable to the plaintiff. It did so on two bases. First, in light of AA v The Trustees of the Roman Catholic Church for the Diocese of Maitland-Newcastle [2026] HCA 2, the Court accepted that the State was in breach of the non-delegable duty of care it owed to the plaintiff as a student at the school when Vella committed his tortious conduct in 2000 – a conclusion his Honour described as inevitable following the High Court's decision. Secondly, the Court accepted that the State would have been liable at common law under the doctrine of vicarious liability for the conduct that occurred while the plaintiff was in year 5, Vella having misused the authority, power and control over the plaintiff with which the State had vested him.

Significantly, the Court also accepted that because the unchallenged psychiatric evidence attributed the plaintiff's psychiatric injury to the abuse as a whole, without differentiating between the incidents occurring on and outside school premises, the State and Vella were tortfeasors liable in respect of the same damage for the purposes of s5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW).

The plaintiff gave unchallenged evidence of the abuse and its consequences. The Court rejected Vella’s arguments centring upon intervening acts.

His Honour awarded damages against Vella totalling $1,073,192 which included $40,000 for aggravated damages given the way Vella conducted his defence, his lack of remorse, failure to accept responsibility and raising matters by bare assertion of 'intervening acts' on the eve of the hearing. A claim for exemplary damages was refused: applying Gray v Motor Accident Commission, the substantial criminal punishment already imposed on Vella barred such an award, and it could not be established that any of the tortious conduct relied upon had gone unpunished. The award was considerably higher than the settlement figure because the settlement represented a substantial compromise of the plaintiff's claim as quantified shortly before the hearing (over $981,000 plus out of pocket expenses and costs), including a significant compromise of the contestable question of the State's responsibility for Vella's conduct in the period after the plaintiff left the school.

In relation to the cross-claim, the State established that the school had adequately implemented various Department of Education procedures for identifying and responding to child sexual abuse in NSW schools. Further, the State relied on the testimony of teachers who worked closely with Vella at the school. Both witnesses said they saw and knew nothing that they thought was inappropriate and confirmed the school had implemented strong child protection programs.

The Court also accepted the State and Vella were liable in respect of the same damage in so far as that occurred at the school, Vella was not entitled to an indemnity by his employer for his ‘serious and wilful conduct’ by operation of s5 of the Employees Liability Act 1991 (NSW), which disapplies the statutory indemnity in s3(1)(b) of that Act, and that the State's settlement with the plaintiff was objectively reasonable, assessed prospectively as at the date of settlement.

On apportionment, guided by the established considerations of culpability and causal potency, his Honour accepted the State’s submissions that Vella’s conduct was intentional, criminal, sustained over a substantial period of time and represented a gross abuse of trust and that he had engaged in acts of subterfuge which were effective in concealing his conduct within the school (and from the plaintiff’s family) despite the schools reasonable response to the risk of child abuse. By contrast, there were no complaints, no red flags of the kind identified in the applicable codes of conduct, and no indication that any student was at risk; nor was it the State's fault that Vella failed to notify the school of his private tutoring, that being a teacher's own responsibility.

His Honour thus held that pursuant to ss5(1)(c) and 5(2) of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) it was just and equitable that Vella contribute 100% of the settlement sum, thereby representing a complete indemnity and in addition that Vella was in breach of his contract of employment with the State with the consequence that the State was entitled to recover its defence costs from Vella.

This decision appears to be the first in New South Wales in which a Court has ordered a perpetrator teacher to completely indemnify the State for the sexual abuse of a student. The indemnity is complete in every sense: through the statutory claim, Vella must make good the entirety of the State's payment to the plaintiff, comprising both the damages component of the settlement and the plaintiff's costs, while the contract claim additionally renders him liable for the State's own costs of defending the plaintiff's suit – costs which fell outside the reach of s5(1)(c) – assessed by reference to what the State reasonably incurred. The decision also demonstrates the forensic value of evidence that a school adequately implemented the Department's child protection policies and procedures: where a teacher sexually abuses a student while concealing that conduct from a school that responded reasonably to the risk of abuse, the teacher may be left to bear the full financial consequences: the settlement, the plaintiff's costs, and the State's defence costs alike.

Moray & Agnew acted for the State, having briefed Catherine Gleeson SC and Thomas Scott both of New Chambers.

Further information / assistance regarding the issues raised in this article is available from the authors, Jacqueline Haski, Partner, Alex Carolan, Senior Associate, or your usual contact at Moray & Agnew.