Former Canberra Marist Brothers student, Damian De Marco, first complained of abuse by Chute in 1986 when he was in Year 12. This was ignored, the commission heard.
He complained again in September 1993 after learning Chute, who had assaulted him in 1981, was still teaching at the school.
Then-headmaster, Brother Christopher Wade, referred the complaint to the head of the order, Brother Alexis Turton, who returned to the stand to give evidence at Thursday's hearing.
Brother Turton flew to Canberra and met Mr De Marco in the Qantas lounge at the airport in 1993.
Mr De Marco said he was told Chute had denied the accusation of abusing him in 1981 and that the brothers had not been able to find anyone else who had been assaulted.
Chute is now known to have abused at least 39 students during his time as teacher in Canberra from 1976 to 1993.
This includes offences against eight boys between 1986, when Mr De Marco first lodged a complaint, and 1990.
Brother Turton allegedly told Mr De Marco, Chute was in Sydney and would not be allowed to return to Canberra or teaching. This did not happen.
In a file note made at the time Brother Turton wrote: "after this discussion [at the airport] it was decided that, subject to the Brother, who had already been interviewed by me once, following up with therapy, it was not the sort of difficulty that demanded that he come out of school. I gave the assurance that he would be carefully supervised, that he would not be alone with boys, [and] that he would go into therapy."
"I called JC [Chute] to Sydney and together we went for an interview with Fr Brian Lucas. The outcome of this [was] certain admissions from many years back... but no awareness of anything serious more recently. He had little awareness of Damian and was adamant that nothing of a serious or genital nature had taken place between them.
"JC is now in therapy with Margaret Rootes of Centacare in Canberra. At this time there is no concern from the young man who made the complaint [De Marco], from the headmaster or from Margaret Rootes, that there is a danger in JC continuing to teach, although the teaching will be from Grade 9 and above.
"The only difficulties in the past have been with younger boys."
Brother Turton defended his decision to allow Chute to return to teaching, at Thursday's hearing.
"At this stage it was still a matter of energetic and aggressive hugging," he said.
He has admitted to the royal commission it was unlikely Chute would receive the degree of supervision he had indicated.
"There was no proposal to watch him while he had interaction with boys in his day-by-day duties as a teacher at Marist College was there?" Counsel assisting the Royal Commission, Simeon Beckett, said.
"No, not period-by-period, no," Brother Turton said.
Mr Beckett put it to Brother Turton this had placed boys at Marist College Canberra at risk.
"That was the reason for consideration of this," Brother Turton replied.
Chute's teaching career underwent a dramatic reversal of fortune on December 4, 1993, when the Canberra college counsellor Janine Mahoney, rang Brother Turton with a fresh complaint of abuse of a 17-year-old Year 11 student identified as ACN.
This time around the parents were not happy to leave the matters in the Marist Brothers' hands and contacted ACT officials.
ACN said he had been hugged on several occasions by Chute while he was in Year 7 and when he finally rejected the advances Chute had turned against him.
Brother Turton admitted he was aware at this time the complaint may be related to sexual abuse.
He flew to Canberra on December 8, was picked up by the boy's father at the airport and driven to a meeting at their home, which was also attended by Brian McLeod a representative of the Canberra Community Youth Advocate's Office.
"The father goes through a period of family history, highlighting suicidal periods around the age of 13 and 16... The lad has had no positive communication with his mother for many years."
Mr Beckett put it to Brother Turton he had been unhappy about the approach taken at the meeting by Mr McLeod, who suggested the family seek financial compensation.
"I thought the focus at this time was a pastoral approach, but of course they had every right to take up the financial approach whenever they wanted to," Brother Turton replied.
"But you were annoyed, weren't you, at the youth advocate making that suggestion?" Mr Beckett asked.
"I thought for the moment the pastoral approach was the way to focus," Brother Turton said.
For once the brothers acted promptly, withdrawing Chute from teaching almost immediately.
This officially took effect on January 1, 1994 and Chute's career as a teacher was finally over.
Another 14 years were to elapse before he was finally convicted of 19 counts of child sexual abuse and sentenced to six years in jail.