Father Raymond Garchow was given his freedom when the Crown entered a stay of proceedings with the Solicitor-General on Wednesday.
Garchow faced eight charges over the sexual abuse of boys at the Marylands school, run by the Brothers of St John of God Order, in the 1970s.
He was a sick man, and one of the two complainants was also unwell, which contributed to the case being pulled.
A second complainant also had trouble with a disability, which made the prospect of a trial difficult.
Detective Sergeant Earle Borrell, who has headed inquiries into the school since 2003, said that while the decision was disappointing, it was "the most appropriate outcome considering the circumstances that now exist".
"Although the complainants are disappointed they understand and have expressed relief that they can finally move on with their lives," Borrell said.
Counsel for Garchow, Rob Harrison, said his client maintained his innocence.
"I think anyone would be pleased to get that particular monkey off their back," Harrison said.
"He is just very pleased that it's all over ... I think that's the end."
Brother Timothy Graham, of the Brothers of St John of God, said there was a sense of relief "no doubt on the part of every person involved" that there was a permanent stay on the case.
"I would like again, on behalf of everyone associated with the Brothers of St John of God, to apologise to those who have in any way been hurt during their time at Marylands," he said.
"In many ways, the concerns raised by these matters are likely to remain with us for ever."
Borrell said he was pleased the last of the cases was finally closed.
"There's been some really sad cases, some terribly sad cases and the guys working on the inquiry found it really difficult," he said.
He did not think the victims would necessarily feel justice had been done but they could at least move on.
Ken Clearwater, of the Male Survivors of Sexual Abuse Trust, said that now all of the court proceedings had finished the Government had to launch an inquiry into what happened at the school over the 30 years it operated.
"If the Government doesn't do anything that would be wrong for all those involved," Clearwater said.
A lot of the boys were wards of the state when they were abused so the Government had to front up, he said.
"It's great that it's over and it's great that it's been to court. It is sad, as far as the Garchow decision goes but it means also now we can start doing some stuff to help these guys move on," Clearwater said.
Two men, Brother Rodger Moloney and former clergy Bernard Kevin McGrath, have been convicted on a total of 28 charges.
Moloney will be sentenced on Friday next week.
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