Giving evidence to the royal commission by video link from Sydney, Bishop Holland said he knew nothing at the time about the offending of serial paedophile Peter Rushton or another priest, Stephen Hatley Gray, who was convicted of sex with a boy between the ages of 10 and 16 in 1991.

Bishop Holland said he de-licensed Gray because he had held a wild party at the Wyong rectory and trashed it.

“What I was told was that here had been a wild party in the rectory, a gathering of homosexuals and it had turned nasty and they had trashed the rectory,” Bishop Holland said.

“That’s what I thought it all about.”

He repeatedly parried questions from counsel assisting, Naomi Sharp, and from commissioner Peter McClellan about the Gray matter, saying he only “became aware of that charge when I read about it three weeks ago in the media”.

Bishop Holland was shown correspondence about the Gray case, which involved an allegation being made to police on February 12, 1990.

The hearing was shown a letter of resignation from Gray, which was hand-written to Bishop Holland and dated February 11, the day before.

Ms Sharp said: “Have you ever been made aware of a suggestion that this letter was deliberately dated to predate the police matter even though he did not resign until after the police matter had been reported.”

Bishop Holland said he had not. He was also taken through correspondence written by a lawyer, Keith Allen, who was a member of the diocese and who was representing Gray in his trial.

A letter from Mr Allen to Bishop Holland – seeking a reference for Gray in a Gosford District Court matter – was shown to the hearing.

Bishop Holland wrote the reference, but said he thought it was a general reference for Gray, in order to start a new life “and I wrote it in that sort of spirit”.

Mr McClellan: “So you were prepared to write a reference without knowing what the criminal proceedings were all about, is that right?”

Bishop Holland: “Yes, I think so, but I didn’t, I really didn’t know when I wrote this letter, I didn’t know there were criminal proceedings taking place.”

Bishop Holland continued to insist that he did not know that Gray was leaving over paedophilia despite writing that he doubted Gray would get employment anywhere else in the church.

He said he could not remember a letter from Bishop John Reid in Sydney, which said: “I informed you in good faith that I believed that his [Gray’s] problems with his sexuality had been resolved”.

“I have no memory of it and I’m really saying if I haven’t got a memory of it, I didn’t have that conversation with him,” Bishop Holland said. 

Earlier in the day Bishop Holland said he now accepted that Rushton and others had been serial paedophiles but he insisted that was only because it had been published in the media.

He disputed earlier evidence from a lay church member, Suzan Aslin, that she had told him of Rushton’s abuse of another priest’s son, who had been discovered curled in a ball on his bed after Rushton had assaulted him at the age of four or five.

Asked by counsel assisting Naomi Sharp if there was a framework for reporting priest misconduct at that time, Bishop Holland said: “There was no structure to deal with that”.

Asked if there was a complaint against a priest it would be dealt with ad hoc, he said: “That would be right”.

Bishop Holland agreed with Commissioner McClellan that he had the ultimate responsibility to ensure the priests he licensed were acting in the proper way.

“I knew nothing about allegations made about Rushton,” he said.

Ms Sharp asked Bishop Holland if he would have expected to be told if one priest had sexually assaulted another priest’s child.

“Well, in theory I would have thought he would have come to me at once and told me,” Bishop Holland said.

“We have evidence he did come to you and make this disclosure to you,” Ms Sharp said.

“I absolutely deny any disclosure was ever made to me.”

On lay preacher James Michael Brown, who was the subject of evidence on the opening day as a paedophile who worked in concert with Rushton, Bishop Holland acknowledged that the “might have” signed the paperwork to license Brown as a lay reader without knowing him or making inquiries about him.

He denied that a leading Synod member at the time, Professor David Frost, had told him about Brown and Rushton fostering boys from St Alban’s. 

“I am suggesting to you that you telephoned Suzan Aslin and discussed with her her concerns about Rushton and Brown fostering boys from St Alban’s,” Ms Sharp said.

“I deny that it happened,” Bishop Holland.

The hearing continues on Thursday, with another two dozen witnesses listed for this week and next week.