Orbital, sometimes you only discover the true nature of someone's personality in times of adversity. You're clearly unhappy with the way your CFI handled this and with the support you've received post-incident, so I'm sure you've done the right thing to move on and put this behind you.
Treat this as a learning experience for yourself and for your student, and you'll both be better pilots for it.
As far as liability goes, my take is that there is always going to be an unavoidable element of risk in flying instruction & deciding whether or not a particular student is competent to fly a particular sortie on the day can't be an exact science. Provided that neither of you were actually negligent, I'd say any financial loss should be borne by the stakeholders. A/C owners & flying training organisations are quite happy to take the profits when all is well, and they should stand for the losses when, despite everyone's best efforts, an incident such as this occurs. If you rent out your plane for ab-initio training, you must expect it will be flown by very inexperienced pilots, who will occasionally make expensive mistakes.
The owners might care to consider that stopping this particular student from flying their aircraft will do nothing to reduce the chances of the same thing happening in future.