Parents of children allegedly abused over a 10-year period by a serial paedophile at a pentecostal primary school were told to take the matter up with the abuser, an inquiry has heard.

Kenneth Sandilands was accused of abusing up to 30 children at the Northside Christian College in Bundoora, Melbourne, between 1983 and 1992.

The school ran under the auspices of the pentecostal Northside Christian Centre when Denis Smith was senior pastor.

The royal commission into institutional responses to child sexual abuse is looking at how the pentecostal movement and the school handled allegations against Sandilands, who was jailed in 2000 for two years for sexually abusing eight children at the school.

On Tuesday, Smith said he did not construe warnings given to Sandilands in 1986 and 1987 to be about “anything of a sexual nature”.

In 1987 Sandilands was given a set of guidelines requiring he not touch children, have them on his knee or be alone with a child.

When there were further allegations in 1991 that Sandilands had been cuddling children and getting them to touch his genital area, it was concluded his intentions were “pure and in no way sexually oriented” and he had not broken the spirit of the guidelines.

It was not until 1992 when a parent complained that Sandilands had used pornographic pictures for sex education that Smith accepted the sexual nature of the complaints.

The parents of the girl told police later that Smith told them “children could make things up” and “we might have been throwing things out of perspective”.

Sandilands went on sick leave in 1992 and resigned four years later.

When more allegations were made in 1993, Smith spoke to Sandilands about them.

“He denied them all,” Smith said. He did not go to police.

The pastor received a written statement from Sandilands and made a recommendation to the school board he chaired that parents be told the church had “done all we can possibly do to ascertain the truth in this matter” and be given Sandilands’ letter.

He also suggested that parents be invited to take the matter up with Sandilands.

Smith denied he was protecting the church and school reputation in his approach.

“Fundamentally I believed that it was a parent’s responsibility over their own children to do what they feel is appropriate, hence they were given a copy of the letter,” he told the commission.

John Spinella, who succeeded Smith in 1998 as senior pastor, said his predecessor completely bungled the situation and he could not understand why he had not gone to police.

During mediation discussions with six victims who started civil proceedings in 2001, there was a lot of anger among parents directed at Spinella and the church, he said.

The commission was told that action was settled for $525,000 among five plaintiffs.

The commission resumes on Wednesday to examine how a pentecostal church in Queensland responded to sexual abuse by youth pastor Jonathan Baldwin between 2004-2006.