A lawyer acting for the Sydney Catholic Archdiocese advised against pursing an abuse victim for costs.

Cardinal George Pell knew the Catholic Church was pursuing an abuse victim for more than $500,000 in legal costs against the advice of its lawyers, the royal commission into child sex abuse has heard.

A lawyer who acted for the Sydney archdiocese told the hearing then-Archbishop Pell was “seemingly giving instructions” on how to conduct some of the church’s vigorous defence against a claim made by abuse victim John Ellis.

Paul McCann, a partner in law firm Corrs Chambers Wesgarth which acted for the archdiocese in the Ellis case, on Tuesday said he had told the church it should not pursue costs but his advice was not followed.

Mr McCann said the church’s insurers, Catholic Church Insurance (CCI) had “strongly taken” the position that “they had interests to underwriters that needed to be taken into account”.

The commission heard details of eight actions taken by Corrs in defending against Mr Ellis’s claim, including a refusal to mediate, a decision to challenge whether Mr Ellis was abused and the decision to pursue him for costs.

Mr McCann told the commission he was instructed by Dr Pell’s private secretary, Michael Casey, and all steps taken by his legal team were with the church’s knowledge and consent.

Mr McCann said he “didn’t have any doubt” that Dr Pell was being kept up to date with details of the case.

“It’s obvious from some of the exchanges that he was seemingly giving instructions as to various steps,” Mr McCann said.

The Archdiocese began procedures to recover more than $550,000 in costs from John Ellis who lost a 2005 court case against the church for sexual abuse by a priest when he was an altar boy in the Sydney parish of Bass Hill in the 1970s.

However, the church dropped its pursuit of the costs after three years.

The commission has previously heard that the church was aware Mr Ellis was at risk of self-harm if costs were pursued.

Mr McCann also accepted that aspects of the case run by Corrs should not have happened and were “a little mean”.

The commission heard details of the 2005 Supreme Court cross examination of Mr Ellis in which he was asked if he had had any homosexual experiences prior to his encounter with Father Duggan at age 14.

The church’s lawyers challenged whether the abuse had occurred as part of their strategy, despite the church already having advice that it had occurred.

Commissioner Peter McClellan asked Mr McCann if the fact of the abuse should have been disputed in court.

Mr McCann replied: “On reflection, probably not.”

Mr McCann had also advised the church that it should not provide a “spiritual director” to Mr Ellis – a person to act as a guide to help him resolve the effects of abuse – while litigation was under way.

Asked if his decision was, in retrospect, mean to Mr Ellis, Mr McCann said: “A little mean, yes.”

The hearing resumes on Thursday.