The man, who was abused in the 1980s as a child several times by now-jailed former priest Louis Victor Daniels, brought civil action against the Tasmanian diocese of the church.
He argued a deed he signed in 1994, which forced Daniels to pay him $34,000 and included a confidentiality clause, should be made void.
The church didn't deny Daniels sexually abused the man, but argued the deed should stand.
Supreme Court of Tasmania judge Michael Brett ruled the deed should be set aside in the "interests of justice".
He found the 1994 settlement and deed giving effect to it was "heavily influenced" by the church's desire to protect its reputation.
Justice Brett said responsible members of the church were aware of Daniels' sexual misconduct against children in 1981.
The man told the church about being abused by Daniels in 1987.
A bishop then promised to remove Daniels from his position with the Church of England Boys' Society but he remained for years, having an "unfettered and direct" access to boys.
Daniels was promoted in years following, including in 1989 as Archdeacon of Burnie, described as one of the highest ranking positions in the diocese.
"He was effectively tolerated, and even rewarded, by the church. It is a matter of record that Daniels went on to abuse others after 1987," Justice Brett said.
Daniels has been convicted of abusing about a dozen children and was jailed for a third time in 2023 for six years.
When negotiating the 1994 deed, the church used the man's desire for the abuse allegations to not become public against him, Justice Brett said.
In 1994 after the settlement, Daniels was given a letter from a bishop marked strictly confidential, seeking an assurance there had been no other similar crimes since 1987.
The letter included a condition that if there was civil or criminal action regarding sexual abuse it would create a "public situation" in which Daniels would have to resign.
Daniels resigned from the Tasmanian diocese in late 1994 and moved to the ACT where he worked in a pastoral position for the church and at a public school.
Justice Brett awarded the man $2,396,531 in damages, to cover pain and suffering, loss of earning capacity and other factors.
The church never offered the man support and didn't report Daniels to police, which compounded harm, Justice Brett said.
In a statement, the Anglican Diocese of Tasmania said the 1994 settlement was "done in good faith following negotiations between the lawyers for both parties".
"We do however welcome any survivor of abuse who wishes to revisit a previous settlement," it read.
As of February, the church had finalised $7.2 million in civil claims to 21 survivors and has paid $3.9 million to 64 people through the National Redress Scheme.
The church said it has instituted many changes over the past 25 years to protect children and vulnerable people, and prevent abuse, urging survivors to come forward.
1800 RESPECT (1800 737 732)
National Sexual Abuse and Redress Support Service 1800 211 028
