A court orders the South Korean government to pay $177,000 for families of deceased passengers of ill-fated ferry.

The South Korean government is liable for the botched rescue of 304 people who drowned when their overloaded ferry sank, a court has ruled.

The Seoul Central District Court ruled on Thursday that next of kin of the deceased passengers should be compensated $177,000 and that the parents of the students who lost their lives should be awarded $35,000, according to Yonhap news agency.

The court also awarded between $4,400 and $17,500 to the siblings and grandparents of the deceased.

Thursday’s decision marked the first time a court found the state liable for the disaster.

MV Sewol was overloaded and travelling too fast when it capsised en route to Jeju island on April 16, 2014, investigators have said.

The crew told the passengers, the vast majority of them schoolchildren, to stay inside the vessel while the captain and crew were among the first to flee the sinking ship on a rescue boat.

Captain Lee Jun-seok was convicted on homicide charges and sentenced to life in prison in 2015.

The Sewol disaster left the country deeply traumatised and was a crippling blow to the now-removed leader Park Geun-hye.

The court found the ferry operator Cheonghaejin to be equally liable and ordered it to share the costs.

An earlier offer by the government to compensate $413,000 each to the families of the students who died was turned down by many of the families, who insisted that they wanted a court to decide on state liability.

Despite obtaining a ruling confirming the state’s responsibility, victims’ families said they were disappointed with the outcome, Yonhap news agency reported.

“We are not pleased that the court has acknowledged the liability. We take it as a matter of course,” Yoo Kyung-geun, a representative of the families was quoted as saying by the South Korean news agency.

“We wanted the court to explicitly state what this country had done wrong and to what extent a company should be responsible for their actions, not whether or not they were guilty.”

Yoo said the families want a more favourable ruling during the appeals process.