A sexually abusive teacher has been ordered to fully indemnify NSW for a settlement the state made to an alleged victim.

It is thought to be the first time a court in the state has made such an order.

A student known as NS sued the NSW government for breaching its duty of care and for being vicariously liable for the conduct of primary school teacher Ricky Vella.

She also sued Vella for damages for battery and assault.

On the first day of a District Court hearing in July, NS settled with the state for $755,000.

The court awarded her $1.07 million from Vella, who was in prison for indecently assaulting students but who denied any abuse or battery against NS.

The court also heard a cross claim by the state Education Department against Vella. The state sought to recover some of the costs of defending the legal action, plus damages for breach of employment contract. It was successful in both instances.

The court says when an employee commits a civil wrong for which their employer is also liable, the employer is liable to indemnify the employee.

However, this does not apply if the employee commits “serious and wilful misconduct”, as in this case, allowing the state to sue Vella.

Vella attended the first day of the hearing but refused to participate after that, the court says.

The court heard Vella was NS’ teacher in 2000 when she was in grade 5 and aged about 10.

After he left the school, he continued to see her as private tutor. He sexually abused her at school and outside school premises between 2000 and 2002, the court heard.

Law firm Moray & Agnew, which acted for NSW, says the state established the school adequately implemented Department of Education procedures for identifying sexual abuse, and two teachers who worked closely with Vella testified they saw nothing they considered inappropriate.

Colin Biggers & Paisley lawyers say the case shows how an institution held liable for abuse by an employee can recover settlement payments, and underscores the importance of safeguarding records and criminal convictions in contribution claims.

Read the judgment here.