The former Catholic Bishop of Parramatta Bede Heather has told a royal commission he destroyed documents relating to potential legal action against a paedophile priest.

Bishop Heather told the public inquiry he destroyed documents because he was traumatised by a police search of his office as part of an earlier investigation into sexual abuse by clergy.

John Joseph Farrell (left) during a previous hearing. Credit:Barry Smith

The Royal Commission into Institutional Responses to Child Sexual Abuse heard Bishop Heather advised his lawyers Makinson & D'Apice of his actions in a 1996 letter.

"Following the police raid on our offices, shortly afterwards I took the precaution of destroying all papers of mine which could have been to the disadvantage of persons with whom I deal," he wrote in the letter which was partly read out before the commission.