The former canonical advocate for a priest accused of molesting boys once called a church investigation into the alleged abuse a "witch hunt" and a "charade", but now says he was later shocked by the evidence.
Father John Nestor was charged and convicted of indecently assaulting a 15-year-old altar boy in Wollongong in 1996 but was later acquitted on appeal.
Further allegations later surfaced, prompting attempts to have Father Nestor removed from the ministry and setting in train a church investigation under canon law.
The Royal Commission into Child Sexual Abuse, at a hearing in Sydney on Thursday, heard that even before the criminal charges and church investigation, other members of Wollongong's Catholic Diocese had become aware of Father Nestor's activities.
Father Mark O'Keefe told the commission that, when he was an assistant priest at Nowra in November 1988, he had become aware of Father Nestor running summer camps for boys.
He heard that boys on one of the camps, which included lessons on "manliness", had to run naked from a bus to a water hole and back, and that there were group shower sessions.
But he failed to report any of what he had heard.
Asked by commission chair Justice Peter McClellan what level of inappropriateness would have prompted him to report the behaviour, he replied: "Inappropriate behaviour, it's a bit difficult to say when a line is crossed, a boundary is crossed."
But he said an "element of smoke" about what was happening at the camps convinced him not to distribute flyers for the event the following year.
The commission heard that Rev Dr Kevin Matthews, who was the canonical advocate representing Father Nestor at the time, wrote to the priest in May 1998 saying there appeared to be a case to answer in terms of inappropriate behaviour.
But in the same letter, he wrote that the complaints against him made it "look as though the whole process was a witch hunt".
"Personally, I think that you have suffered enough and the most appropriate course of action would be to release you to work elsewhere. This is what I suggest when this charade is over."
Father Matthews was asked by Justice McClellan to explain what he meant by "a case to answer".
"Does that mean that, if the behaviour was proved, it would be inappropriate and there would or should be consequences?" Justice McClellan asked.
Father Matthews replied: "... the case to answer would be that the bishop would tell him never to do it again."
"That's as far as you think it should go?" Justice McClellan asked.
"Well, if he promised not to do it again, but I had no understanding then of how deep this had gone," Father Matthews replied.
He told the commission he had since formed a different opinion.
"I was shocked when I saw the evidence of the victim - absolutely," he said.
It was not until 2008 that Pope Benedict dismissed Father Nestor.
The hearing continues.
