The father, who cannot be named for legal reasons, is seeking damages against the Catholic Archdiocese of Melbourne and Cardinal George Pell in the Supreme Court.
He claims to have suffered psychological injury including nervous shock upon finding out about his son's alleged abuse in the mid-1990s.
Up until 2018 the Catholic Church could deny liability to sexual abuse victims using the Ellis defence.
The father's case is believed to be the first to test whether amended laws, brought in to abolish the defence, can extend to secondary victims, including family members.
The Catholic Church argued the man should not have been permitted to sue because he was not the direct victim of Cardinal Pell's alleged sexual abuse.
However, Justice Michael McDonald on Wednesday ruled the laws can extend to secondary victims.
"The plain meaning of the words founded on or arising from child abuse ... includes a claim for nervous shock brought by a parent of a child alleged to have been sexually abused," he said.
Cardinal Pell was in 2018 convicted of molesting two teenage choirboys in the sacristy at St Patrick's Cathedral while he was Archbishop of Melbourne in 1996.
Cardinal Pell has always maintained his innocence and his conviction was quashed in a unanimous decision by the High Court in 2020. He walked free in April 2020 after serving 13 months in prison.
One of the two choirboys died of a drug overdose in April 2014 and his father was informed about the boy's alleged abuse the following year by police.
He claims to have lost money to medical expenses and earning capacity, due to suffering from several psychological conditions after finding out about his son's alleged abuse.
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