An Anglican diocese refused to compensate victims of abuse committed in a children's home, despite previously making dozens of payments in other similar cases, because it was struggling with debts elsewhere, the royal commission has heard.
The Royal Commission into Institutional Responses to Child Sexual Abuse heard that a letter to the Bishop of Grafton from one of these victims detailing his abuse went effectively unanswered for 18 months.
The victim was one of dozens of children at the North Coast Children's Home in Lismore, northern NSW, who suffered brutal sexual and physical abuse at the hands of priests and church workers, the commission heard.
This victim, as well as another who had also written personally to Bishop Keith Slater, subsequently heard back from his lawyers, who said their claims would not be considered, despite around 40 other victims receiving settlements in the past.
"I asked Bishop Slater early in 2013 why he had refused compensation to (the two later victims). He responded 'Well, we are in the middle of a financial crisis'.
"He also said that the diocese was not legally liable. I was appalled that victims had been told that in effect they had 'missed the boat'," she told the commission.
At the time, Ms Hywood said, the diocese had been struggling to meet a roughly $7 million debt incurred by one of its schools but she remained deeply worried about the long delay in responding to the victim's letter.
"I was really concerned that when the (church) did make contact with him 18 months later would he still be alive? That is the sort of damage that can be done by not responding appropriately," she said.
Ms Hywood later wrote to the Anglican Church in Australia, Archbishop Phillip Aspinall, to outline her concerns at the way the diocese had handled the issue.