The Catholic Church in Northern Ireland has been dealt another hammer blow after it emerged that the Bishop of Derry, Dr Seamus Hegarty, was party to a secret compensation deal between a priest and a girl he allegedly sexually abused when she was just eight years old.

Dr Hegarty — who this week apologised on behalf of the Church to the victims of sexual abuse — was named as one of three defendants in the civil legal action, according to court documents seen by this newspaper.

The action was settled in 2000 without admission of liability by the Church, but with a payment of £12,000 to the alleged victim and a handwritten letter of apology from the priest.

It’s the latest in a series of crises to rock the Catholic hierarchy, following on from the weekend revelation that Cardinal Sean Brady, the Primate of all-Ireland, had attended meetings where children signed vows of silence over complaints against paedophile priest Brendan Smyth.

Cardinal Brady yesterday publicly apologised for his role in the affair.

But even as he was addressing a congregation in Armagh Cathedral, another senior Catholic cleric was provoking outrage by telling BBC Radio Ulster’s Stephen Nolan that he would not go to the police if any paedophile priest confessed in him.

And now comes the emergence of the ‘secret deal’ to buy the silence of another alleged victim of a priest.

The settlement document — which was signed by lawyers on behalf of Dr Hegarty, his predecessor Bishop Edward Daly and the alleged abuser — also contained a confidentiality clause prohibiting the parties from discussing the case.

Dr Daly was ill at the time the girl’s family approached the bishop’s house about the allegations so they met instead with Bishop Francis Lagan who was standing in for him.

The girl’s ordeal began in 1979 and lasted until 1989, when she revealed details of the abuse during her 18th birthday party at her family’s home in Londonderry.

The priest, who was based in the Derry Diocese, was unwittingly invited into the home by her parents.

They were impressed by the interest he showed in their eight-year-old daughter.

The alleged abuse began with the priest hugging and kissing her, before proceeding to subject her to vile sex acts. The girl claims the priest said God would “punish” her if she spoke out about her ordeal.

It is understood the abuser was initially moved away from the area and the victim’s family were told he was in a priest’s house in the Republic. But they were prompted to take action when her father discovered he was back in Northern Ireland and even serving in a nearby parish.

It is not known if the Church contacted the police about the abuse claims.

The Belfast Telegraph knows the identity of the priest, but has decided not to name him at this stage.

When we contacted the Derry Diocese for comment on the allegations yesterday, its media liaison officer Fr Michael Canny said no response would be forthcoming as “there is not enough time to trawl through records”.

But Fr Edward McGee, media liaison officer of the Down and Connor Diocese, said: “Since the implementation of the Framework for the Church's Response to Child Abuse in 1996, and more recently in our present Safeguarding Children — Standards and Guidance for the Catholic Church in Ireland (2009), it is policy that any concerns of a safeguarding nature are passed on to the relevant statutory authorities and confidentiality cannot be assured either for the perpetrators of child abuse or the survivors.

“This process is managed by the Safeguarding Office, which is run by professionals in the field of child protection and safeguarding and who regularly liaise with the inter-agency forum to ensure the care and protection of our young people.”

This week Bishop Hegarty apologised to victims of sex abuse at two children’s homes in Derry and Belfast.