Having valued his starlet at £3m in April, Hill was left not best pleased by the Canaries' best offer - one he subsequently described as "derisory".
The Bosman move will now go to a tribunal.
"We won't get what we deserve for Jacob," said Hill. "I haven't got any problems with Jacob, we've got a superb relationship. It's the system which I don't like. The only people who will benefit from this are Norwich.
"Jacob will be playing for them next season and we might not have had the tribunal to see how much money we'll get for him.
"The offer we got from Norwich was an insult to myself, the club and a massive insult to Jacob Butterfield. I know why Norwich did it. That's what Premier League sides can do."