Anna Crenshaw is simultaneously suing the church, a college she attended at the time and the man who assaulted her for damages, with a week-long hearing scheduled to begin in the Supreme Court in Sydney on Monday.
Instead, soon after the hearing began the parties adjourned for several hours of negotiations, after which they returned having reached an undisclosed agreement.
"In principle the matter has resolved," the woman's lawyer Kelvin Andrews told the court.
Previously in a local court, the male perpetrator pleaded guilty to indecently assaulting Ms Crenshaw in 2016.
"The claim against the church relates to how it responded to the report, including managing the plaintiff's welfare," Hillsong lawyer Gillian Mahoney told the court.
Angus Macinnis, lawyer for the man who committed the assault, said there is some dispute over the exact nature of what occurred and the extent of the impact on Ms Crenshaw.
He described the assault as "single, fleeting, spontaneous", which he said would have bearing on the level of psychological injury incurred by MS Crenshaw.
Church founder Brian Houston was cleared in 2023 of covering up abuse committed by his late father. (Bianca De Marchi/AAP PHOTOS)
Mr Macinnis also told the court the woman's initial account of the assault varied from later versions and was somewhat "less serious".
The woman's lawyer Kelvin Andrews told the court among witnesses in her case will be two people appearing via an audio visual link from Pennsylvania in the United States.
In an unrelated recent legal challenge facing Hillsong, church founder Brian Houston was cleared in 2023 of covering up abuse committed by his late father, Frank Houston decades earlier.
When Mr Houston learned his father had abused a young boy, he confronted him personally and shared it among Church leadership, but failed to report it to police.
In late 2022, Mr Houston pleaded not guilty to a charge of concealing a serious indictable offence, stemming from the Royal Commission into Institutional Responses to Child Sexual Abuse.
Mr Houston argued he did not report his father's abuse to police because he did not believe the victim wanted that to happen.
A magistrate agreed Mr Houston was not criminally liable for not reporting the abuse, saying it was reasonable based on his understanding of the victim's wishes at the time.
Ms Crenshaw's case has been adjourned until Thursday while the matter is formally resolved.
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