The King's School's inaction on reporting an alleged indecent assault between teenage students was described as a "catastrophic failure" before a royal commission on Tuesday.
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Senior staff at Parramatta were warned they could face criminal charges by not reporting an alleged indecent assault to police but failed to do so, the commission heard.
The Parramatta school's deputy headmaster Andrew Parry told the inquiry he contacted police for advice about the alleged assault involving a teenage student ejaculating on another child at a 2013 camp.
The Royal Commission into Institutional Responses to Child Sexual Abuse heard an officer at Castle Hill police advised him via email to make a formal report "to avoid any possible (criminal) action".
The email was circulated to senior school staff, including headmaster Tim Hawkes, school counsellor Greg James and staff development director Robert Chandler, the inquiry heard.
Dr Hawkes told the commission he did not dispute receiving the email but could not recall reading it.
The inquiry heard Dr Parry read the email but conceded in evidence: "I did not read the email carefully enough."
Dr Parry told the commission the email was discussed at a meeting with Dr Hawkes, Mr James and Mr Chandler in August 2013. Dr Hawkes's evidence is that he could not recall the email being discussed at meetings.
Counsel assisting the commission David Lloyd put it to Dr Parry that it was "extraordinary" that senior staff mis-read the email.
"So the leadership group had access to an email saying it would be a criminal offence not to make a report to the police . . . and you say to the commission that not one person at that meeting raised the fact of advice of police that it would be a criminal offence not to report. That is an extraordinary state of affairs, would you agree?," Mr Lloyd said.
Dr Parry replied: "I would agree."
Dr Parry told the commission he later apologised to Dr Hawkes for his mistake, writing in an email: "It was a complete oversight on my part."
Under questioning from Mr Lloyd, Dr Hawkes conceded it was a "catastrophic failure" by the school.
In a 2000 email from Dr Hawkes tendered to the commission, the high-profile headmaster indicates that schools would be reluctant to report abuse due to adverse publicity.
The email, in relation to media coverage of a sexual abuse case at Trinity Grammar School, was sent to the school's headmaster Milton Cujes.
"If, in reporting an incident it means that the broad flapping ears of the press will be allowed to sensationalise the case on the front page of their newspapers, then this will be a very strong disincentive to report anything," Dr Hawkes wrote.
"The newspaper article the other day would have served a clear warning to head that responsible reporting of an incident is an ill-advised action, and best avoided as much as possible. No threats from legal quarters will come close to persuading a head that it is worth reporting something if this is the reward they are going to reap."
Dr Hawkes is expected to continue giving evidence on Monday.
The inquiry into public and private schools continues before Justice Peter McClellan.
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