Parishioners continue to stand by Father Michael Higginbottom after he was suspended from St Augustine's Roman Catholic Church, in Darlington, in December 2004.
An Echo investigation reveals that the Catholic Church paid out £35,000 to a man who claimed he was sexually assaulted by Fr Higginbottom while the priest was teaching at St Joseph's College, in Upholland, near Wigan, in the late 1970s.
It is understood that the suspension took place after the former St Joseph’s pupil made a complaint about the alleged abuse to the Archdiocese of Liverpool, which was responsible for the school.
The man later gave a statement repeating the allegations to Lancashire Police.
Detective Sergeant Stephen Ollerton, from the public protection unit, based at Ormskirk, confirmed that officers investigated the claim and interviewed Fr Higginbottom, although he was never charged with any crime.
After initially contesting the case and claiming the time limit for a claim to be made had expired, the Catholic Church – without admitting liability - agreed to a £35,000 out-of-court settlement and the case was dropped.
The Catholic Church has been resolute in its silence since Father Higginbottom was suspended. Officials have repeatedly refused to say why the priest was effectively banished.
However, the legal action sheds new light on the removal of the priest from the Darlington parish where he was highly regarded by his parishioners.
In the particulars of claim documents seen by The Northern Echo, Fr Higginbottom is accused of, on many occasions, fondling the claimant’s penis, rubbing the inside of his leg and groin and requiring him to be naked in front of him.
The man, who cannot be named for legal reasons, made further allegations of repeated sexual assault by two other priests at the college.
He said the alleged abuse had left him with serious mental health issues that had had a profound impact on his life.
His statement adds: “I suffered for years with mood swings, waking with bed sweats and drinking too much.”
The former pupil’s legal team claimed the defendants were negligent because they failed to heed or act upon information available that there were one or more paedophile priests perpetrating offences against pupils at the school.
The former pupil was represented by Jonathan Wheeler, a solicitor with Bolt Burdon Kemp, who specialises in representing child abuse victims.
He confirmed the former pupil had received a payout from the Catholic Church, adding: “The money he received meant that he could set himself up in a business of his own and get his life back in order after it had fallen off a cliff.”
As part of the civil claim, a second former St Joseph's pupil came forward to say he had witnessed Fr Higginbottom apparently engaged in inappropriate sexual behaviour at the school.
The Northern Echo has obtained a copy of the defence document drawn up for Bishop Hugh Lindsay, the Archbishop of Liverpool and trustees of the Liverpool Catholic Archdiocesan Trust.
It denied that the defendants were guilty of any negligence and denied the allegations of abuse.
The document says the claimant had ample opportunity to complain to other members of staff, such as his form master, the head teacher or to his parents when they visited.
It adds: “The defendants have no record of a contemporaneous complaint being made by the claimant, or any other pupil, against the said priests.”
St Joseph's College was a Roman Catholic seminary which gave a secondary education to boys aged 11 to 18. It was run by a board of trustees headed by the Archbishop of Liverpool.
The school closed in 1992 following a decline in pupil numbers.
The Northern Echo contacted the Archdiocese of Liverpool, however it refused to comment on the legal action or the allegations against Fr Higginbottom.
The Diocese of Hexham and Newcastle, which suspended the priest, also declined to comment on the legal claim and how the allegations of sexual abuse related to the priest's suspension.
At the time Fr Higginbottom was suspended, parishioners were told he was "spending some time away from the parish" while information received was being investigated.
Since then, the diocese has refused to reveal any details of the investigation, prompting strong criticism from parishioners who feel they have been left in the dark.
Darlington Borough Councillor Cyndi Hughes, a parishioner at St Augustine's, said: "I continue to be at a loss to understand or explain why Fr Higginbottom is being prevented from resuming his ministry when there is no evidence against him.
“Michael's most basic human rights must surely have been breached by this unwarranted exile imposed by the church hierarchy.
"As a practicing Catholic, I am deeply saddened by the lack of communication shared with our parish community on why this decision was taken and why, in the absence of any proof against our parish priest, Fr. Higginbottom has not been returned to us.”
The Northern Echo approached Fr Higginbottom, who is now living in Jesmond, Newcastle.
He said he was not allowed to comment on the case because the investigation was ongoing, adding: “I’m not free to discuss anything because of legal restraints. I’m not allowed to say anything at all, I’m sorry.”
Asked about allegations that he had abused boys at St Joseph’s, Fr Higginbottom said he was not aware of the nature of the allegations against him – despite police confirming that he had been interviewed about the former pupil's claims.