A woman has been awarded more than $1 million in damages for sexual abuse she suffered at the hands of her school principal.

The landmark Supreme Court decision is one of Victoria's highest ever payouts in a child sex abuse case and sets a precedent that one legal expert said would "strike terror into the hearts" of schools embroiled in abuse scandals across the country.

Adass Israel School in Elsternwick. Credit:Pat Scala

The woman is one of three sisters alleged to have been sexually abused by former Adass Israel School principal Malka Leifer, whom the school flew out of Australia when allegations came to light in 2008.

Mrs Leifer, a mother of eight, was arrested in Israel in August 2014 and is facing extradition to Australia, where she is wanted on 74 counts of sexual assault.