The father is alleged to have groped the then-15-year-old, who has an intellectual disability, while they were alone in her bedroom.
During a trial at the NSW District Court in Bega, the jury was told the daughter reported the alleged abuse to a teacher in September 2022, saying her dad was cheating on her mum with her.
It was alleged the father touched his daughter once on the breasts and then put his hand inside her underpants.
On Thursday, Judge Dina Yehia dismissed the jury after it was unable to reach a unanimous verdict and indicated she would order a fresh trial.
The initial trial heard from witnesses including the girl's mother and the teacher who reported the alleged abuse, as well as viewing a recording of a police interview with the father.
In the interview, he claimed he was completely blindsided by the allegation and did not know where it came from, saying he had much less to do with his daughter since she became a teenager.
The 39-year-old pleaded not guilty to two counts of sexually touching a child between the ages of 10 and 16.
He said the family largely kept to themselves at night, with the girl spending much of her time on the social media app TikTok.
"When she was young it was like daddy's little girl," he said.
"These days it's 'go away, I just want to be left alone'."
The teen said her father touched her inappropriately on multiple occasions, according to the teacher.
"I only have half a dad," the teen allegedly said.
"Dad's been cheating on mum."Â
When asked who the father had been cheating with, the teen allegedly replied: "With me."
The class for students with intellectual disabilities had done a lesson on who can see their bodies before the girl made the comments, the court was told.
"My students are very vulnerable," the teacher added.
The matter has been listed for arraignment on October 11 before a fresh trial begins.
1800 RESPECT (1800 737 732)
National Sexual Abuse and Redress Support Service 1800 211 028
19°C