Toronto Catholic priest Tom Brennan, 74, has been charged with 14 offences.
They include sexually assaulting a boy while he was a priest at Waratah in the 1980s as well as common assault and performing acts of indecency at the same church.
But the ABC has been told some of the charges - understood to be a first for Australia - relate to Brennan's alleged actions in relation to defrocked former priest John Sidney Denham.
Police say while Brennan was a school principal he failed to report sexual abuse by Denham at a Newcastle Catholic High School in the late 1970s.
Denham is yet to enter pleas to nearly 50 charges relating to 14 boys.
Police have told the ABC the case will set a precedent.
There are scores of clergy abuse victims in the Hunter Valley prompting growing calls for a Royal Commission into sexual assaults by priests.
The State Opposition has backed the calls for the Royal Commission, but Premier Barry O'Farrell says police are best equipped to deal with the issue.
"Victoria is going down a different route," Mr O'Farrell said.
"They've got an inquiry.
"We have active police investigations underway and nothing should happen that gets in the way."
The Catholic Bishop of Maitland-Newcastle, Bill Wright, says he is saddened by the charges against Brennan.
"These charges represent (the) most grievous crimes, however as with all citizens Father Brennan is afforded the presumption of innocence," Bishop Wright said.
"I also ask you to pray for all those who have been harmed by the trauma of child abuse, for Father Brennan that he may find the grace to repent if he is rightly accused or to endure the burden of being wrongly accused and for the families and friends of all those involved.
"I urge all the faithful not to rush into judgement and accept the wisdom and justice of our legal system."