The former headmaster of a prestigious Perth private school who decided to issue a formal warning to a teacher in 2004 instead of sacking him for "inappropriate behaviour" with students has admitted there was a systemic failure of management.
The ex-head of the school is identified only as WD because of the victims' identities are legally protected at the Royal Commission into Institutional Responses to Child Sexual Abuse.
WD testified he "laboured over" how to deal with a complaint from a female teacher in 2004 who walked in on the teacher and saw his hand on the inside thigh of a boy sitting on his knee in his Year 5 class.
The complaint came after two earlier reports that detailed similar physical contact by the teacher, who was later convicted of molesting five students between 1999 and 2008.
WD conceded he did not factor in the protection of children after deciding that while there was a risk of sexual abuse, he did not see evidence it was happening.
"It was an important decision with potentially massive ramifications either way I decided," he said.
"I was not convinced that there was sexual activity.
"I arrived at the conclusion that there was inappropriate interest, that behaviour was unprofessional and unacceptable from that perspective, but I did not arrive at the conclusion that I had a child molester on my staff, that I had a person who had malicious intent on my staff when it came to the welfare and safety of children."
WD conceded he did not call the police, ask advice from a child protection agency, speak to parents of children named a complaint letter or speak to anyone about the best way to go about talking to the children themselves.
"From the children's point of view, I was concerned about any trauma, any anxiety they may feel being interviewed," he said.
"I can only say it was a poor decision."
WD said part of his consideration was the reputation of the school but "it was way back in the queue" of factors.
The inquiry continues.