*Disclaimer: This article contains details about sexual abuse which may be distressing for some readers. Reader discretion is advised. 

The decision in NS v State of New South Wales (Department of Education) [2026] NSWDC 254 handed down on 17 July 2026 by Abadee DCJ, demonstrates that an institution held liable for abuse perpetrated by an employee, without any fault of its own, can recover the settlement sum from that perpetrator, provided it can objectively justify the settlement and demonstrate its own low culpability. In this case, the State also recovered its own defence costs through a separate contractual claim. 

On 22 April 2024, the plaintiff (NS) commenced proceedings in the NSW District Court against the State of NSW (Department of Education) (State) and her former primary school teacher, Ricky Joseph Vella (Mr Vella). NS alleged that Mr Vella sexually abused her between 2000 and 2002 when she was aged between 10 and 12. The abuse began in the form of grooming through a fabricated classroom "leadership" group and further assaults in a storeroom. This abuse continued after NS left school through private home tutoring and outings that Mr Vella engineered by ingratiating himself with her family. 

The plaintiff's claim against the State was brought in negligence, breach of non-delegable duty and vicarious liability. The claim against Mr Vella arose from the abuse which she alleged constituted the torts of battery and assault. 

The hearing was conducted over three days in early July 2026, by which time Mr Vella had been criminally convicted of multiple sexual abuse offences, including four counts involving the plaintiff.  The teacher was found guilty of aggravated assault on all four counts against the plaintiff. Mr Vella was serving a term of imprisonment during the hearing.  

On the second day of the hearing, by consent, judgment was entered for the plaintiff against the State in the total sum of $755,000 (inclusive of costs fixed at $275,000). The settlement was intended to be in full and final satisfaction of the plaintiff’s claim against the State, irrespective of whatever sum, if any, she recovered from the second defendant. 

The Court accepted that the settlement between the plaintiff and the State was objectively reasonable at the time it was made, noting the State's acknowledgment that, in light of the High Court's decision in AA v The Trustees of the Roman Catholic Church for the Diocese of Maitland-Newcastle [2026] HCA 2 (AA), its liability for Mr Vella's conduct whilst the plaintiff was his student was effectively a foregone conclusion. Also taken into account, was the plaintiff's particular vulnerability to litigation-related trauma, the savings in cost, time and court resources and the risk of aggravated damages arising from Mr Vella's conduct in the lead-up to hearing.  

Following the plaintiff’s settlement with the State, what remained was the plaintiff’s claim against Mr Vella and the State’s cross-claim against the cross-defendant, also Mr Vella. 

The State's cross-claim for contribution was brought pursuant to section 5(1)(c) of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) (the Act). As the consent judgment was only prima facie evidence of the State's liability to the plaintiff, the State, in its cross-claim could seek to recover some or all of the $755,000 from Mr Vella on the basis that he too was legally responsible for the plaintiff's loss. 

In establishing the above, the State: 

1. relied upon the plaintiff’s proof that Mr Vella's conduct caused the subject abuse, notably the certificate of criminal conviction was admissible under s 92(2) of the Evidence Act; 

2. established that the damage the plaintiff suffered was caused by the conduct of Mr Vella; and 

3. relied upon child safeguarding policies and procedures that were applicable at the time of Mr Vella's conduct.  

The Court determined that the State had satisfied that it would have been held liable to the plaintiff for breach of the non-delegable duty of care owed to NS and liable under the doctrine of vicarious liability. The Court further determined that the plaintiff's loss was caused by the sexual abuse perpetrated by Mr Vella, such that the State and Mr Vella were tortfeasors liable in respect of the same damage for the purposes of the Act.  

In apportioning contribution, the Court was required to determine what was "just and equitable" [at 219] having regard to the extent of each parties responsibility for the damage, an assessment that, following Podrebersek v Australian Iron & Steel Pty Ltd, turns on both the relative culpability of each party and the causal potency of their respective conduct [at 274].  

On culpability, the Court emphasised that the State's liability was strict rather than fault-based. Neither the non-delegable duty nor vicarious liability, "both of which placed the State on the hook, as it were, said anything about the State's culpability" [at 277]. The evidence showed the school's staff were "apparently diligent and professional teachers, with a stern principal in charge [and] strove to abide by basic requirements expected by the State of Education" [at 278]. The Court further emphasised that there were no complaints against Mr Vella and "this was not a situation where the red flags identified in codes of conduct were manifest" [at 278]. By stark contrast, Mr Vella's conduct "was intentional, criminal and sustained over a substantial period of time and represented a gross abuse of trust that he had gone out of his way to cultivate from a young and vulnerable school girl" [at 280]. 

On causal potency, the evidence of the plaintiff's mother, showing Mr Vella being equally effective in concealing the abuse he perpetrated from the plaintiff's family through gaslighting or emotional manipulation and that a not insubstantial part of the abuse occurred out of the school environment, demonstrated "just how little causal potency any fault…had with respect to the tortious conduct that occurred out of school" [at 281].  

Weighing near-zero institutional culpability and causal potency against Mr Vella's deliberate and sustained criminal abuse (and noting the evidentiary limitations flowing from his decision to absent himself from the hearing), the Court concluded that it was "just and equitable that the cross-defendant contribute 100% of the settlement sum, thereby representing a complete indemnity" [at 282].

1. Where possible, assess potential contributions at an early stage 

Upon being served with proceedings, it is important that institutions promptly investigate and understand if any contribution from an alleged perpetrator is realistic. Whilst the Court's order that Mr Vella provide a 100% indemnity determines legal responsibility, it does not guarantee the money will actually be recovered. Importantly, the Court did not consider Mr Vella's financial position when deciding it was just and equitable that he bear the full amount. In practical terms, an indemnity is only useful if the paying party has an ability to satisfy it. If the perpetrator has no assets or income, the institution may hold a judgment that is difficult or impossible to enforce and could be left effectively bearing the settlement, together with its own legal costs. 

2. Preserve and maintain safeguarding records 

The State's success in obtaining 100% indemnity was significantly assisted by contemporaneous safeguarding evidence demonstrating robust practices were in place. The Court heard evidence from the former assistant principal describing the school's child protection policies as "among the most stringent she had seen" [at 237]. Thus, it is important that institutions ensure they regularly review their child safeguarding policies and procedures as they can serve multiple purposes, including defending primary liability claims and supporting contribution or indemnity claims against alleged perpetrators. 

3. Criminal convictions may strengthen a cross-claim 

Where a perpetrator has been convicted of offences arising from the same conduct that underlies the civil claim, those convictions may provide powerful evidentiary support for a contribution or indemnity claim and reduce the factual issues in dispute. Thus, it is important to undertake key liability and evidentiary investigations early during litigated proceedings to ensure all relevant information is obtained on an alleged perpetrator. 

If you would like advice on managing historic abuse claims or contribution claims in civil proceedings, please contact our Institutional Risk & Liability team.