The former altar boy earlier this year became the first Australian to overturn a settlement with the church in the state's Supreme Court.

The survivor received $32,500 in 1996 after taking legal action against the church. The Court of Appeal has agreed it was not enough given the wrong done to the man.

He was abused from the age of 12 by Warragul priest Daniel Hourigan, between 1977 and 1980. The priest took his own life after being charged.

"It is, in our view, very plainly just and reasonable to set aside the (1996) deed. Indeed, it would positively be unjust and unreasonable not to do so," appeal justices David Beach, Stephen Kaye and Robert Osborn said in their decision on Friday.

This means the survivor can press ahead with seeking damages for psychiatric injury including severe post-traumatic stress disorder and anxiety.

A trial date had been set down for November but this was delayed because of the church's appeal.

Rightside Legal, which represents the man, hopes the trial can go ahead in early 2021.

"No doubt the church will trot out the same second-rate press release saying they feel for the victim and they have changed," senior associate Laird Macdonald said.

"That is obvious rubbish. The church went to the highest court in Victoria trying to justify a pittance it paid to a man whose life was ripped to shreds by a pedophile priest."

The church first learnt of Hourigan's abuse in 1986. It did not tell the police but acknowledged the abuse to its own insurer in 1992.

Hourigan was charged in 1995 with rape, indecent assault, gross indecency and the sexual penetration of a person between the ages of 10 and 16 relating to a number of victims.

He took his life three days later.

The church entered into a deed of release with the survivor now suing it, but only after denying in court that Hourigan perpetrated the abuse while working at the Sale Diocese.

Sale Bishop Greg Bennet said he acknowledged "the enduring trauma experienced by victims of child abuse through the Catholic Church over many years".

"We pledge to provide pathways for survivors and their families to have their experiences respectfully heard, and to redress the harm with practical as well as pastoral means that are determined by the survivor's needs," he said.

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Australian Associated Press