Three days before Holy Communion, eight-year-old Peter* was "grabbed" in the St John Vianney Catholic Church at Greenacre by Father Terrence Millard, "positioned" in front of a symbolic image of Jesus Christ being nailed to the cross and then punished with a "smack" to the upper buttocks for perceived bad behaviour.

When an alarmed teacher reported the incident to the school principal, it triggered a domino effect involving the Catholic Education Office, the NSW Police Force, criminal charges and a court case in which a finding of guilt was delivered – with no conviction recorded against the priest.

After a turbulent 10 months, Peter's distraught parents were happy with the judgement and thought they had found closure.

They were wrong.

A fortnight ago, and just days after the magistrate's ruling, the boy's family became aware of a buzz of chatter among the church community that the priest had "won the case."

They discovered that, in their absence, a verbal announcement was made at evening mass, on July 4, suggesting the court case had gone the priest's way. Their humiliation was complete when they were shown a "parish notice", published in the church bulletin that same night. It read: "On Tuesday June 30, the Magistrate at Bankstown Local Court dismissed the case against Fr Terrence Millard."

"I was so shocked, I had to call the detective and ask: 'Did I get this wrong?' said Peter's mother.

"We are so upset. The church has distorted the truth and swept it under the carpet at the expense of our family. An entire congregation has been misled to believe my poor son is a liar."

Father Millard's lawyer Greg Walsh said his client possessed an "unbelievably good reputation" and had worked "tirelessly" for the community. "This poor bloke's life has been ruined, destroyed. He cannot be a priest anymore because he tried to chastise a child, as he was entitled to do in his own church."

Like most boys his age, Peter is a "sports fanatic". He has won the best and fairest at his local rugby league club, progressed to a black tip in Taekwon-Do and was recently picked to represent the St John Vianney Catholic Primary School at upcoming regional athletics finals.

But, on September 11 last year, Peter's father arrived to collect his son from school, where he was advised of an "incident" involving "the priest."

"As I entered the main foyer of the school office I saw my son sitting with the school principal. He looked anxious … he was slumped over his seat," said the father in a police statement tendered to court.

Peter told his father how, after being seen talking to another student, Father Millard had "grabbed him forcefully by the shirt" using two hands and "dragged him to the back of the church." The boy said he was then pushed up against a wall at the rear of the church where the priest "used an open hand to slap him on the lower back area" before turning around to the rest of the students, saying "you will be next."

The principal confirmed the boy's teacher had also witnessed the incident and reported it "immediately".

Peter's mother told Fairfax Media that in the days that followed, her "happy go lucky" boy became "deeply troubled".

"He struggled to sleep," she said. "He thought he was somehow going to be in more trouble."

Father Millard, meanwhile, forwarded a letter to the Catholic Education Office. "I deny that at any time I hit the child," he said.

He confirmed there were 42 students and one teacher present in church, adding there were "a number of troublesome children" and the teacher had been "distracted" when Peter slid across the pew and "started pulling faces at people who had been to confession."

He then provided his version of events: "After a few minutes, when the teacher did nothing to stop the behaviour of Peter, I left the sanctuary to escort Peter to the Stations of the Cross at the back of the church and asked him to work out why Jesus at the third fall could not get up again … and to stay there for five minutes."

In a later police statement, Father Millard added it had been his job to "restore discipline" in the church, describing the boy as "behaviourally challenged".

"Not that I would … but I have six great nephews and nieces that age, so I know they would whimper, they would scream, they would yell and because there was no response from Peter, there was no way that I hit him because I would not hit a child."

Peter, however, had described the smack as being "a bit painful" in his own police interview. During that session, he chatted to a female detective about his favourite rugby league team, who they might play in this season's grand final and what it means "if someone tells a lie".

"It means ... doing something that God wouldn't do," he said.

"And what happens if someone tells a lie?" she asked.

"They can get in trouble," he replied.

At the resulting hearing, it was the corroborating evidence of an independent witness – the school teacher – that led magistrate Daniel Reiss to find the priest guilty.

In her testimony, the teacher said: "Father Terrence positioned Peter in front of one of the Stations of the Cross … his back towards the altar … then leant down and said something at his level. They were standing five or six metres away from me. Father Terence then turned to walk back to the altar and in the same movement he used his hand to smack Peter on the bottom."

Mr Walsh said his client played "no part" in any false information having filtered through to the community. He added the priest tried to lodge an appeal on Friday but the court denied it on the grounds that there was "no conviction".

A spokeswoman for the Archdiocese of Sydney, meanwhile, described the incident as "extremely regrettable".

"Father Millard is on leave and discussions are underway about his future. Unfortunately, the situation has been compounded by a misunderstanding, about the court outcome, which appeared in the church bulletin."

She confirmed a correction will be published that "very clearly and factually states what happened."

* Not his real name

eduff@fairfaxmedia.com.au