But yesterday, on the third day in court, the matter was settled, even though the school had yet to begin calling witnesses. The school would not comment on the settlement, except to deny its reputation had been damaged.

Plaintiffs in the District Court can claim up to $750,000. The Herald understands that the teenager's parents had been isolated from the school community since the incident and had no support from other parents, who apparently feared Tara's reputation would be tarnished by the scandal. The settlement came just hours after the defence counsel, Ian Harrison, SC, had put to the teenager that "in order to avoid being criticised or getting into trouble you concocted the story that you had been raped".

He said she was seen by friends "happy and pleased with herself", riding on the back of a moped - she claimed she was grabbed by men on motorbikes and taken to an alley in the village of Sorrento, where she was attacked. She also denied his suggestion that she had put a backpack on her front the following day and "made a joke, saying 'I'm pregnant"'.

He said that she had told a parent, Joseph Grassi, also a solicitor, that she had "led the boys on, flirted and encouraged them". She denied this. Mr Harrison played a surveillance video of the teenager seated at the Landsdowne Hotel at Broadway, drinking a beer alone between 6.30pm and 7.20pm. He suggested this demonstrated she had exaggerated her anxiety.

Asked outside the court if she felt vindicated by the settlement, she replied: "Yes, I do. Yes, I'm happy." The principal of the school, Carol Bowern, said: "The school has been represented by its insurer. The court has reached a decision, settlement has been determined and I'm really not at liberty to say anything further.

"I'm looking forward to going back to Tara this afternoon. The school's reputation hasn't been damaged." The girl's father had told the court that when he was told that his daughter had consensual sex with four boys he met the school principal Carol Bowern to express his disbelief.

"I said you know my daughter ... and she just sort of nodded her head and there was no real response," he said. "She said that [the girl] would have to be disciplined ... because of all the hassles she created, and the teachers would need an apology." He said he regretted accepting the school's version as he "abused" his daughter on the way home from the airport.

"I never gave her an opportunity to speak. I went off the deep end and I'll regret that until the day I die," he said.