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Four men who were allegedly sexually abused by a female teacher have denied lying for financial gain as a state chases the now-elderly woman for part of the multimillion-dollar sum paid out to the former students.

Helga Lam taught languages at a school in Sydney's eastern suburbs almost five decades ago and was arrested in 2021 over the alleged historical molestation of multiple students at the school, in her unit and elsewhere.

The charges were dismissed in July after the NSW Court of Criminal Appeal found she could not be prosecuted because of her gender.

That court found the relevant 1970s law, which was repealed in 1984, applied only to men abusing boys.

The four former students launched civil proceedings against the NSW government seeking compensation and were eventually paid $2.5 million in settlements.

The state is in turn pursuing Mrs Lam, seeking court orders that she be liable to pay at least some of that money.

On Wednesday, the state's barrister David Lloyd SC told the NSW Supreme Court there was evidence that corroborated allegations she had sexually abused the four students.

"How on earth it is said, on Mrs Lam's case, that all of this is made up ... is entirely unclear," he told Justice Ian Harrison.

The men, under cross-examination, all denied colluding with each other or making up the allegations for a financial payout or to help explain infidelities in their own marriages, Mr Lloyd said.

Mrs Lam was accused of multiple acts of abuse in 1978 and 1979, including sex nhật bản with students in a staffroom, in classrooms, at her unit and backstage during a school production of Zorro.

She also allegedly flirted with the students at school, making inappropriate comments about their genitalia and sexual activities.

One of the students said he was told to climb out the window and down a drainpipe after his then-girlfriend barged into a classroom where he was having sex with Mrs Lam.

The teacher threatened to get the girl expelled the following day and started laughing when she remembered how her underwear had been on the floor as she was arguing with the female student, according to court documents.

Another student who was allegedly sexually abused said he was bullied in the playground by a boy who told him to stop spreading rumours about Mrs Lam.

The court could make an inference that this bullying was ordered by the then-teacher herself, Mr Lloyd said.

When another teacher at the school spotted someone who looked like Mrs Lam with a boy on her lap in the staffroom, the other teacher made a complaint to the principal.

However, this complaint went nowhere, Mr Lloyd told the court.

"His response, according to her, was dismissive," he said.

No report of that complaint or any investigation by the school of the allegations had been uncovered, the court was told.

Mrs Lam has denied that she is liable to pay any of the settlement sum and has rejected allegations that any sexual activity occurred.

The hearing continues.

1800 RESPECT (1800 737 732)

National Sexual Abuse and Redress Support Service 1800 211 028