Adrienne Page, QC for Christopher Lillie and Dawn Reed, told Mr justice Eady he should need no further convincing of their 'honesty and complete innocence' after seeing them testify.
She asked what paedophile would contemplate bringing a libel action and undergoing 'an unrelenting and hostile barrage of questions' coupled with publicity, which - if the claims were true - would be likely to reveal other evidence of their alleged perversions.
'The idea is absurd,' she said.
Mr Lillie and Ms Reed are suing Newcastle City Council and the four-member team it commissioned to investigate the city's Shieldfield nursery.
In its 1998 report, the team concluded the pair had sexually, physically and emotionally abused children from the nursery. Four years earlier, they were acquitted of indecently assaulting Shieldfield children.
Miss Page told the judge he had heard evidence of the 'catalogue of professional failures' in the handling and investigation of the events surrounding Shieldfield from 1993 until publication of the report in 1998.
'They have ranged from, on the one hand, the inexcusable professional failings of the consultant paediatrician who 'diagnosed' so many of the children to the reckless disregard for the truth shown by the members of the review team,' she said.
'What is left at the end of all this is the clear and obvious conclusion that Christopher Lillie and Dawn Reed have been the victims of a most terrible injustice.'
She said Mr Lillie and Ms Reed sought awards of damages - including 'aggravated' damages designed to punish the council and team - to cover the 'very grave injury to reputation and the devastating injuries to feelings.'
She referred to an unrelated case in which a libel jury had awarded£350,000 damages to a claimant branded a paedophile.
'It hardly needs saying that a publication by a local authority is held in higher regard for its authority and the quality of its information than an article published in the News of the World,' she told the judge.
Earlier, Gordon Bishop, for the council and team, accepted that if Mr Lillie and Ms Reed succeeded in their case, they were entitled to substantial damages.
'But we would submit to the court to bear in mind damages have to be restricted to the damage caused by the report itself,' he said, adding that their reputations were affected by events before the publication.
Miss Page argued it was inconceivable that abuse of the kind alleged, covering so many children over such a length of time, could have taken place without any of the parents detecting injury or trauma in the child.
'Or that staff in a small nursery could have been unaware of such suffering for so long,' she said.
'Children are said to have been penetrated in the vagina and in the anus, taken to strange locations and injected and submitted to the terror of abuse by complete strangers.
'The scenarios of which the review team seek to persuade the court are wholly incredible and wildly improbable.
'Children would have returned to the nursery in states of extreme distress and pain. Their distress, their pain, their bleeding and their bruising would have been picked up on collection or at home.'
Mr justice Eady had heard 'overwhelming' evidence that former nursery worker Christopher Lillie had sexually abused children in his care, Gordon Bishop said.
Making his closing submissions, the barrister also said the evidence against another worker, Dawn Reed, was not overwhelming, but the only realistic explanation was that she too had abused children.
Mr Bishop listed to Mr justice Eady a number of 'deliberate' lies he said had been told by Mr Lillie on vitally important points.
'There is only one possible reason, which is to hide the truth, namely that he did abuse these children,' he said.
He added that Ms Reed also told lies, which could only have two possible explanations one being that she was protecting herself from the truth that she had been a child abuser.
'The other is that she did not herself abuse children but knows or suspects that Mr Lillie did and she wishes to protect him from the truth,' he said, adding that that was highly improbable.
'Why should anyone protect a person who they know or suspect has abused children?' he asked, concluding that the most probable explanation was that she herself abused or played a part in the abuse.
He described a piece of evidence given by Ms Reed as 'damning' against her former co-worker.
Some children said crayons were involved in their abuse. But the former nursery workers' QC, Adrienne Page, has argued that crayons were introduced into the allegations almost accidentally when a child picked one up off the table when she was being video-interviewed by police.
Mr Bishop referred to Ms Reed's evidence when she said that after Mr Lillie was suspended from the nursery she had seen him at a party and asked him what was going on.
She told the court he 'just said he was accused of putting a crayon in a boy's bottom.'
But Mr Bishop said neither the child nor his mother had mentioned a crayon, nor had any such allegation been put to Mr Lillie by the nursery official who suspended him.
'He could only have known that crayons were involved if he had himself used one,' Mr Bishop said.
'It is a damning piece of evidence, a piece of information which condemns Mr Lillie out of his own mouth.'
Mr Bishop also referred to a little girl's claim that she was taken to Mr Lillie's flat and smacked there. She said he was wearing boxer shorts and had a dog called Shelley which was cream, brown and black.
'A photograph of Mr Lillie's dog shows it was black and quite slim with a bit of brown and a tiny bit of cream,' he said.
'The probability of the child getting this colour combination right if she had not in fact seen the dog are incredibly small, much less than one per cent.'
He told the court that when Mr Lillie was interviewed by police in September 1993, he said he wore boxer shorts and could offer no explanation for the child's comment.
But, nine years later in the libel case, he suddenly 'recollected' for the first time that he had not got his first pair of boxer shorts until Valentine's Day in 1993 from his girlfriend.
'This, conveniently, would have been ten days after the child left the nursery,' Mr Bishop said.
He also referred to Miss Page's arguments about the lack of motivation by Mr Lillie and Ms Reed and the improbability of two abusers being at Shieldfield.
'Motivation is a sensitive topic, because it is very dificult for most people to see what would motivate someone to sexually abuse a child, particularly a child of such tender years,' Mr Bishop said.
'But, sad to say, it does happen on a fairly regular basis.' The barrister added that experience showed that an abuser could be anybody at all.
Referring to the claimed improbability of two abusers at the same nursery, Mr Bishop said there are abusers who do work in pairs.
'It is pointed out that there is no evidence for any connection between Ms Reed and Mr Lillie outside the nursery. There is no suggestion that they were having some sort of relationship, sexual or otherwise, outside the nursery.
'But of course, one knows relationships can go on within the work arena without anyone outside recognising that.'
Mr justice Eady could not rely on any of the findings of Dr Camille San Lazaro, the paediatrician who concluded children from a Newcastle nursery were sexually abused, Adrienne Page said. The QC claimed Dr Lazaro had made a number of admissions in the high court which cast 'irredeemable doubt upon her conclusions'.
'Her conduct in court and the state of her records make it dangerous for a court to draw any conclusions as to what she did or did not see,' Miss Page said in her closing submissions.
Miss Page said Dr San Lazaro admitted that her notes were an embarrassment, unreliable and inconsistent.
She had also accepted that, for most of the consultations, she saw children alone. There was no second opinion and no photographic evidence, Miss Page told the court.
'Out of her own mouth, she is guilty of serious lapses of professional standards,' she added.
The QC said Dr San Lazaro's had agreed in the witness box that she had overstated and exaggerated facts in the reports she sent to the Criminal Injuries Compensation Board in relation Shieldfield children.
She said it was not a question of Dr San Lazaro being 'muddled or sloppy'. She had admitted overstatement and exaggeration in her reports.
'That is a form of misguidedness to encouragepeople to believe children were sexually abused, that is her state of mind,' she said.
'If she is seeing child after child with no findings, is there a pressure on her to make findings?' she said, adding that she meant an emotional pressure.
She argued that what was fundamental to the doctor's approach to the children was a 'morbid desire to find the children had been sexually abused.'
'There are very serious question marks which really do, I suggest, mean that the court has grave difficulties in accepting that any of these children had, so far as the doctor is concerned, evidence consistent with them having been sexually abused,' she said.
Earlier, defence counsel, Gordon Bishop, said some criticisms could obviously be made of Dr San Lazaro and in particular of her record keeping.
But he urged the judge to remember that she 'does have very great experience of this work and is highly regarded.'
He said the suggestion that she may not have known what she was looking at when she examined the children was 'fanciful'.
The hearing is continuing.
STRAND NEWS SERVICE