In 2010, a former St Joseph's School student launched legal action against the diocese, claiming it breached its duty of care in allowing him to be alone with the priest and then failing to act when he reported the alleged assault.
The Cairns man alleged in a sworn affidavit, lodged in Cairns Supreme Court, that he was an altar boy at a church near the school grounds, and Father Joseph Sultana would sexually assault him during school lunch breaks.
The diocese has since filed a defence to the claim, countering it was not responsible for the church's management and if the acts did occur it was "not in the course of Father Sultana's duties as a priest of the Parish or in respect of St Joseph's School".
It also claimed the priest and nun the man said he reported the incidents to did not work at the school at the time, and while the man was definitely a student of St Joseph's, it could not be confirmed he was an altar boy.
"The defendants had no knowledge of, and did not consent to, the plaintiff being alone in the presbytery with Father Sultana during school hours and lunch breaks (which is not admitted), or at all," the document obtained by The Cairns Post said.
The man's legal team has filed a response to the diocese's claims, reaffirming the allegations.
No hearing date has been set.
Father Sultana's last known whereabouts were in his home country of Malta, where he was working in another Catholic diocese last year.
He was ordained in the 1960s and worked in the Far North for about 20 years after relocating from South America.