The Catholic Church is defending its decision not to defrock a paedophile priest who abused boys in Dunedin.

It was confirmed this week Magnus (Max) Murray, now aged 90, is in the care of a Catholic-owned rest-home in Auckland. Despite admitting 10 charges of sexual offending against boys in Dunedin, dating back to the 1950s, Murray has retained his status as a priest after his conviction in 2003, the church has confirmed.

It was a discovery that outraged Murray Heasley, the head of a group of former pupils campaigning for Kavanagh College to adequately acknowledge its links to Murray's dark past.

He was a teacher at St Paul's High School, which later became Kavanagh College, at the time of his offending.

A picture of him was on the college's honours wall until this year, when a complaint from Heasley and 12 other former pupils prompted its removal.

Heasley said the church's handling of Murray was another insult to victims. He was at Mercy Parklands, a hospital-level facility owned by the Catholic order, Sisters of Mercy, where he was receiving dementia care.

The religious, non-profit facility offered a mix of Catholic and non-religious services, including a chapel, but catered for the general public.

And, although in retirement, the priest still used the title of "Father" at the home, including on the sign on his bedroom door, it was confirmed.

"This is not justice," Heasley said.

"The man is living the life of Riley and his victims are still suffering.

"Why is he still a priest? What does it take to lose your priestly status?" Heasley asked.

Bill Kilgallon, the director of the Catholic Church's National Office for Professional Standards in New Zealand, which investigates complaints against clergy, said the situation would not be "normal process" today.

If a member of the clergy was convicted of child abuse now, a request to defrock them - a process known as laicisation, or returning them to the status of a lay person - would be sent to the Vatican. Asked if he knew why it had not happened this time, Kilgallon referred the question to the Auckland Diocese and Bishop Patrick Dunn.

Dunn declined to speak to the Otago Daily Times, but his spokeswoman, Dame Lyndsay Freer said although Murray retained the status of a priest, he had been stripped of his public ministry in 1990, when he retired as police began investigating complaints about his offending.

That meant he could not administer sacraments or celebrate Mass, which was "quite a big punishment for a priest", she said.

She rejected suggestions the church should go further and disassociate itself from him.

"You can't disassociate yourself totally. As a church we have to allow for redemption, for the possibility of rehabilitation."

She could not say whether a request to laicise him was ever sent to Rome, or why a decision to do so had not been made, but age may have been a factor.

Murray's offending in Dunedin dated from 1958 to 1972, when complaints emerged and he was sent to Sydney for treatment by then-bishop of Dunedin, John Kavanagh.

He returned to New Zealand four years later and was allowed to resume pastoral duties in Waihi and other parts of the North Island, where suggestions of further offending emerged.

He was in Hamilton when he retired in 1990, aged 63, and remained under the Hamilton diocese, and Bishop Edward Gaines, despite a move to Auckland.

Freer said she had no idea why Gaines had not laicised him.

"We don't know why that is. Bishop Gaines is long dead."

By 2003, when Murray was jailed for five years for his crimes, he was aged 76, and "maybe it was decided that it wasn't necessary", Freer said.

"Today, a priest who offended against a child would not be returned to the ministry and they would normally be laicised."

Mercy Parklands chairman Dennis Woods, speaking with the approval of Murray's family, said there were no background checks on residents, but he had no concerns about his continued presence there.

"He is, and will remain, a resident."

Heasley also questioned whether the church was helping to cover the cost of his care, which Kilgallon said would be normal when a priest retired.

Freer said that was not the case, but questioned whether it would be "terribly wrong" for the church to do so.

"Do you cast someone out and never, ever forgive them, and never, ever give them another chance, if they genuinely have had treatment and served their time and had their wings clipped?"