In 1996, concerns about managing the looming crisis led to the creation of the Melbourne Response program, which capped compensation payments at $50,000, and later, $75,000. Cardinal George Pell, the architect of the program when he was archbishop, has previously said the payout amount was "based on justice" and was in keeping with payouts made under the government's victims of crime compensation system. "I have tried to be prudent with money, but my record shows that I have acted compatibly with the general standards of the community and I have tried to be generous," Cardinal Pell testified before a state inquiry in 2013. "In any position in which I have had the lead, we have fully respected the obligations to compensation." But a Sunday Age analysis of data compiled by the royal commission shows the cap potentially saved the church up to $62 million.

The Melbourne Response was used to manage 93 per cent of all abuse claims made against the archdiocese of Melbourne relating to the misconduct of priests, with the remaining victims seeking mediation or filing civil claims via the court system. The data shows victims paid compensation under the Melbourne Response received an average payout of $46,000, compared to an average $270,000 settlement for those who attempted to sue the church – a nearly sixfold increase. The huge disparity comes despite no victim ever winning a lawsuit against the church due its policy of fighting all claims regardless of merit and the use of a controversial legal precedent – known as the Ellis defence – that prevents the church from being sued successfully because it does not technically exist as a legal entity. It is understood these average $270,000 payments were made as a result of negotiated settlements after victims had obtained independent legal representation. The figures show the church has paid out a total of $14.8 million in compensation to victims of sexual abuse by priests in the archdiocese of Melbourne.

Francis Moore, executive director of administration for the Catholic archdiocese of Melbourne, said they rejected the $62 million payout figure. "The proposition is based on the flawed assumption that victims who have been compensated through the Melbourne Response wanted to go to Court and would have succeeded if they had. The Melbourne Response provides redress and free counselling without having to prove anything in Court," he said. The Melbourne Response was long lauded by the church as an independent, fair and humane way of dealing with sex abuse complaints. But newly released documents show the threat of potential lawsuits became a prominent concern for the archdiocese of Melbourne in the late 1980s and early 1990s, years before the church would officially acknowledge the existence of a clerical sex abuse problem. This included repeated warnings by senior religious leaders in Melbourne that attempts should be made to prevent written records from being used against the church in future legal proceedings.

"It does seem better to keep good records. On the other hand, it was noted that too many people are keeping too many records," according to the minutes of a 1992 Special Issues committee meeting chaired by then Bishop Peter Connors. "Special Issues" was the term the church used internally to describe the sex abuse issue. At a high-ranking Curia meeting in early 1994, the minutes noted that "due to discovery the number of written comments to be kept to a minimum". In the royal commission last week, Bishop Connors was queried about the church's apparent plan to avoid exposure. Question: How could you keep too many records?

Answer: I just, I cannot comment really, I just don't know. Question: Someone obviously had something in mind? Answer: Yes. A representative of the archdiocese said the bid to avoid legal discovery was "part of the larger story about the culture of secrecy and something nobody in the church at the time could be at all proud of". In 1993, the potential for scandal also led senior church figures to consult prominent public relations firm IPR and its top spin doctor, Laurie Kerr. Three other consultants were later hired to help design a "Special Issues PR strategy". It is unknown what advice was provided.

The minutes from these meetings provide a rare insight into the inner workings of the Melbourne church's most senior councils at a time when the sexual abuse scandal was yet to become widespread public knowledge. In August 1996, Archbishop Pell discussed the idea of creating a special trust to "avoid an open-ended call on funding for counselling fees" for abuse victims, to only days later canvass suggestions of how the church could financially support three paedophile priests set to be released from prison. Meetings also describe plans for multimillion-dollar property deals and commissioning a new painting of the archbishop, while senior leaders were also expressing concern about "being seen to apply the maximum penalty" against paedophile priests, the protection of church assets and their own exposure to liability in sexual abuse lawsuits. The Sunday Age has previously revealed the church was facing financial exposure to sexual abuse compensation claims as early as 1988 – more than seven years before the creation of the Melbourne Response and Towards Healing victim assistance programs in 1996. Mr Moore said the archdiocese also "absolutely rejects" allegations it fights every legal case regardless of merit and noted it does not rely on the Ellis defence.

But earlier this year the archdiocese of Melbourne was one of many religious institutions and orders around Australia that refused to officially renounce the Ellis defence. cvedelago@theage.com.au