Former Newcastle Anglican priest Allan Kitchingman will not have to face a civil court claim

In 2002, Kitchingman pleaded guilty to five charges of sexually abusing a North Coast Children's Home youth, 14, in 1975 and 1976. He was jailed for 18 months and eventually defrocked in 2014 after the royal commission into child sexual abuse exposed the church's abysmal handling of allegations involving former workers at the Lismore children's home.

Last month, Justice Peter Garling ruled that a civil claim for compensation brought by another former resident of the children's home against the Anglican Diocese of Grafton be permanently halted because Kitchingman suffers dementia and cannot give evidence.

The alleged victim said he was abused when he went to stay with Kitchingman and his family over the Christmas holidays in Byron Bay in 1974 when he was a teenager.

Justice Garling ruled to permanently halt the compensation claim against the church after finding that Kitchingman was unable to accurately recount events or instruct his lawyers due to his "diminished mental capacity" and there was no other evidence to determine the claim, outside of the alleged victim's account.

Justice Garling also ruled to permanently stay a cross claim brought by the church against Kitchingman

The court heard the late Newcastle Anglican Bishop James Housden kept a ''very careful watch'' on Kitchingman when the former ''nightclub entertainer'' studied to be a priest at St John's College, Morpeth, from 1960. That was because of Kitchingman's ''earlier background and associations'', the bishop said in a letter.

But when Kitchingman was convicted of a ''child sex matter'' in late 1968, after being caught "red-handed" by the police, the bishop offered his immediate support and pledged to keep him in the ministry ''under a bishop who would be fully informed of the circumstances''.

In December 1968, Bishop Housden wrote to the Bishop of Grafton, Gordon Arthur, recommending Kitchingman for a transfer. He soon moved to the Lismore parish, which included the church-run North Coast Children's Home.

"I am convinced that he is fully repentant, that he is really concerned about the wound to the church which has been caused here, and is anxious to fulfil his ministry," Bishop Housden wrote.

"I think you need have no fear that he will not play the game or cannot be trusted, though I have warned him, as I think others have, that he must avoid 'occasions of sin' and situations in which he may become 'anonymous', as he did here in an honest endeavour to freelance among some of the wandering and lost youth in this large city. He did this not realising his own weakness."

In a letter to Kitchingman in January 1969 Bishop Housden wrote that he was ''glad to know that the Bishop of Grafton was so kind and understanding''. "I ... believe that you can and will have a happy and fruitful ministry there,'' Bishop Housden wrote.

The court also heard evidence about a "confidential file note" prepared by the director of professional standards in the Anglican Diocese of Newcastle Michael Elliott, who is a former police officer.

"The file note contains reference to a suggestion that the Diocese files on Mr Kitchingman had been amended and a yearbook falsified with respect to him," Justice Garling said in his judgement.

Year books show Kitchingman was at Singleton from 1963-66, Wallsend 1966-68, Lismore 1969-70 and 1973-76, Eureka/Clunes 1971-72, Mullumbimby 1976-81, Tweed Heads 1981-88, Tamworth 1988-97, and Darwin until he retired in 2000.