Unanderra priest Father Mark O'Keefe was questioned about his support for an accused child molester - in defiance of his bishop's orders - at the Royal Commission into Institutional Responses to Child Sexual Abuse on Thursday.
Wollongong priest John Gerard Nestor was convicted of aggravated sexual assault towards a teenage boy in 1996 but was later acquitted.
After other complaints about Mr Nestor's behaviour at summer altar boy camps and a long campaign by the Wollongong Catholic Diocese, he was defrocked by decree of the Pope in 2008.
In 1998, however, Fr O'Keefe allowed Mr Nestor to conduct Mass at his Unanderra church despite instructions from then Wollongong Bishop Philip Wilson that he not do so, the commission heard.
This incident was reported on page one of the Mercury of September 11, 1998, in the article, "Rebel Priest defies bishop".
Speaking of his long acquaintance with Mr Nestor, Fr O'Keefe told the commission he became aware of his summer camps in November 1988.
"Sometime later, I remember hearing a story to the effect that boys on one of John Nestor's camps had been required to run from the buses to the waterhole and back naked, or something like that," he told the commission.
He said the practice made him feel "uncomfortable" and struck him as odd, but when asked whether he felt he should report it to the bishop, Fr O'Keefe said, "Not at that point, no."
However, when he was approached by Mr Nestor to distribute flyers the following year, he chose not to because of "the slight discomfort" he felt.
When Mr Nestor was acquitted, Fr O'Keefe penned a letter to Bishop Wilson, urging him to quickly take Mr Nestor out of "ministerial limbo" and restore his "good name and character".
Fr O'Keefe told the commission he was "pleased to receive some good news", which he hoped would "give the Church a bit of a boost" in light of other sexual abuse scandals.
"I hoped the bishop would also see it as good news," he said.
"But he, as it turned out, had information I didn't have."
Though he would not concede to the commission that he had openly defied the bishop, Fr O'Keefe agreed he knew Mr Nestor was not allowed to practise.
Further, Fr O'Keefe continued to disobey the bishop's instructions, refusing to read out an apology about Mr Nestor's appearance at Mass.
Fr O'Keefe maintained this rebellion against Bishop Wilson for years, most publicly by writing a letter to the Mercury in February 2001.
This letter was quoted in a front-page story and accused the bishop of "blind justice" in his quest to stop Mr Nestor from practising as a priest.
Despite his long-held support of Mr Nestor, Fr O'Keefe told the commission he now accepted the Church's final decision to stand him down.
He said he might have come to this conclusion earlier had he been given more information, saying he was not aware of some of the complaints against Mr Nestor until the commission's opening address.
"If I had more information about the extent of his … inappropriate dealings with young people, I would have had a different opinion," he said.
Current Wollongong Bishop Peter Ingham also appeared before the commission on Thursday, speaking of his frustration about the length of time it took for the diocese's final appeal to have Mr Nestor removed from the ministry.
The hearing continues.