The avoidance of any admission of liability was what drove the Catholic Church’s dealing with a victim of abuse in Brisbane, an inquiry has heard.

Although the Catholic Archdiocese of Brisbane had income from an $154 million development fund, it was trying to avoid a payout to a woman still suffering from being abused as a child by a priest.

The revelation came on the second day of a royal commission hearing into how the church dealt with Joan Isaacs, abused by Father Frank Derriman at a Brisbane convent school in 1967 and 1968,

The former archdiocesan chancellor, the Very Rev Dr James Spence, who acted as a “conduit” between the archdiocese, lawyers and the church insurers during negotiations with the victim in the late 90s and early 2000s said he understood the fund was worth about $154 million in 2001.

Dr Spence, now retired, said he was not aware then if any money was specifically available for abuse matters other than from insurance.

After two years of mediation, Ms Isaacs accepted an ex-gratia payment of $30,000 but had to sign confidentiality clauses, while around $20,000 went on expenses.

A letter Dr Spence wrote in April 1999 to Laurie Rolls for the insurers was tendered in evidence.

In it, Dr Spence expressed reluctance to formally admit the abuse “even though he (Derriman) was found guilty”.

He also said “concern should be expressed rather than go into the area of an apology once again”.

Dr Spence told the commission he was responding as a lawyer, and at the time an apology could be construed as admission of liability.

Dr Spence said his remarks about Derriman would have been concerned about “vicarious responsibility”.

Justice McClellan asked if he thought, in light of community expectations of a church which invited engagement by young people, “vicarious liability had a place to play in this”.

Dr Spence said the church had set standards and the individual might fall short: “the fact that Frank Derriman fell short of the standards – I cannot say the church is responsible”.

Earlier on Tuesday Rev Dr Adrian Farrelly, who is now chancellor of the archdiocese, and who sat in on the facilitation process with Ms Isaacs, conceded after questioning by the chair that he should have offered her an apology on behalf of the church and not just express sorrow, as he did.

Justice McClellan asked him if he understood an apology from the church left open the discussion about legal responsibility in the church.

He replied that he did but he was not an expert on that aspect.

Justice McClellan said he would not take him there “but you understand that it’s an issue that’s of great concern to many people”.

The Royal Commission into Institutional Responses to Child Sexual Abuse on Tuesday heard from the church-appointed facilitator in the Joan Isaacs case, Bernadette Rogers as well Dr Farrelly and Dr Spence.

The hearing continues on Wednesday.