A NSW school house-mistress who was previously jailed for at least five years for sexually abusing boys in her care has been found not guilty on the grounds of mental illness in a retrial of her case.
The court had previously heard the woman had suffered from bipolar disorder and was receiving ongoing psychiatric treatment.
In 2011, the District Court found her guilty of sex offences against a number of boys carried out over a five-month period in 2009.
They included fellatio and penile vaginal penetration, at locations including the school sick bay, in her flat and on camping trips.
She was jailed for a maximum eight years, but in December 2012 was granted a retrial.
Her conviction was quashed last year by the Court of Criminal Appeal, which found evidence about her mental state had not been properly analysed.
On Thursday, crown prosecutor Siobhan Herbert argued there was a possibility the woman could pose a danger to the community should she not be taken into psychiatric custody and not take her medication.
"On the balance of probability, the judge has to be satisfied that the safety of the persons will not be seriously endangered if she is released," Ms Herbert said.
"If she does not adhere to her medication regime, she is a danger."
Ms Herbert said the same conditions of CJ's bail should be applied as a condition of her release.
"It is not bail, but a condition of release," she said.
In making his decision, Judge Williams ordered the woman reside at her mother's house, be of good behaviour and not be within 100 metres of a school.
He also ordered she not be unaccompanied at any public place where there are unaccompanied children; that she must report monthly to her doctor, not approach any crown witnesses and comply with any apprehended violence orders.
"I am satisfied that she is not a danger to herself or to the community, but I propose to release her on these conditions," the judge said.