Cardinal George Pell introduced the Melbourne Response to sexual abuse cases in the Catholic church because victims were not being treated in a compassionate and consistent way, he will tell the royal commission.

The method of handling sexual abuse cases by the Catholic archdiocese of Melbourne was introduced in 1996 by Pell, the most senior member of the Catholic church in Australia. It is under review for the first time since its inception in 1996.

Pell, now the Vatican’s financial controller, will give evidence to the Royal Commission into Institutional Responses to Child Sexual Abuse via video link on Thursday. His argument was outlined on Monday morning by counsel assisting the commission, Gail Furness.

She said church lawyer Richard Leder and archbishop of Melbourne, Denis Hart, would also give evidence about how the scheme operated.

Furness said the commission would scrutinise the appointment by the church of independent commissioners to investigate sex abuse allegations; a free counselling and professional support service provided to victims, known as Carelink; and the compensation panel which provided ex gratia compensation payments to victims.

Ex gratia payments made under the Melbourne Response by the church to May 2014 amounted to more than $17m, Furness said. The cost of administering the response was just over $17m, which meant the scheme had cost the church almost $35m.

Victims making claims against the church outside the scheme had received larger payouts, she said, with the church now capping payments at $75,000. That cap had previously been $50,000.

The commission would also hear from three people whose sexual abuse cases were dealt with under the Melbourne Response.

Between October 1996 and March 2014, 351 complaints were made to the Melbourne Response, Furness said. Of those, 326 were upheld, 9 were not upheld and 16 are currently undetermined.

Of the upheld complaints, 80% related to alleged incidents of child sex abuse occurring between 1950 and 1980.

“The two institutions in the Melbourne archdiocese subject to the largest number of Melbourne Response complaints are Sacred Heart primary school and Sacred Heart parish, both in Oakleigh,” Furness said.

“Seventy-seven individuals up to 31 March 2014 have been named as the subject of one or more of the 326 complaints … 42 are known by the archdiocese to be deceased.”

Parish priest Father Kevin O’Donnell and Michael Glennon had the largest number of complaints against them, the court heard – 50 and 23, respectively.

On Monday, Chrissie Foster will be the first witness to give evidence in the hearings. She will say that two of her three daughters, Emma and Katie, were abused by O’Donnell when they were young school students.

In 1995, O’Donnell was charged with 49 child sex offences. That same year he was jailed for 39 months.

After several suicide attempts, Emma told her parents in March 1996 that she was among the abused. Later, they would discover that Katie was a victim as well.

By November 1996, O’Donnell was released on parole. He died in 1997 and was buried a priest.

In 1997, when Emma was 15 years old, the Fosters decided to go through the Melbourne Response to get help for her. But they also consulted with a separate firm of solicitors to see what other options might be available to their family.

The church offered Emma the maximum payout available at the time – $50,000. When the Fosters applied for separate compensation under the Melbourne Response for their suffering, they were denied and told compensation was only for primary victims of abuse.

In 1999, the Fosters decided to withdraw from the Melbourne Response and pursue legal action independently. An out-of-court settlement was ultimately reached between the Fosters and the church, with the Fosters receiving $750,000 plus costs.

In her witness statement she will describe the impact of the abuse on her daughters’ lives, as well as the perceived inadequacies of the Melbourne Response.

Ahead of the court hearings, sexual abuse survivors made their presence felt outside the court. They filed into the court, while others watched the proceedings unfold from large screens placed outside the courtroom.

Leonie Sheedy, co-founder of the Care Leavers Australia Network, said people had come “from Wollongong to Wodonga” to listen to the hearings.

“We want the church to show their moral compass by starting to contribute to a redress fund,” she said. “How much longer must this go on for before that is announced?”

Ray Prosser, 87, was among the protesters. He said he was placed in a number of Salvation Army homes as a child, where he was raped by a staff member.

“I got a small payout of $23,000, minus $6,000 I had to pay in solicitors’ fees myself.

“It is chicken feed. And others who have been through a lot worse than me are in the same boat.

“This should never have happened but it’s still happening and I want all of these evil men jailed and people given the compensation they deserve.”

The hearing continues.