Spedding is suing the State of NSW in the Supreme Court for malicious prosecution, seeking compensation for reputation harm and psychological treatment.

He's also seeking exemplary damages to punish police for purportedly using the courts for an improper purpose.

The tradesman was an early high-profile suspect in the disappearance of three-year-old William from a home on the NSW mid north coast in September 2014.

Police searched Spedding's Bonny Hills home and drained his septic tank in January 2015 but found no evidence linking him to William.

Before being categorically ruled out in both investigations, the tradesman was charged in April 2015 over the historical child abuse claims, spending 56 days in custody and then being released on strict bail conditions.

"The investigation prior to charging was done in extreme haste – three or four weeks, at most," lawyer Adrian Canceri said in final submissions on Wednesday

"The investigation was not in any way professional, careful or proper."

By January 2016 at the latest, Canceri said lead detective Sam Brennan couldn't have honestly believed in the prosecution.

Clear evidence had emerged that the complainants had been coached by another person to make allegations and another person's evidence undermined the case.

The charges were later dropped by prosecutors.

Retired homicide detective Gary Jubelin, who at the time led the Tyrrell investigation, is also accused of telling Spedding during the 2015 arrest that "I'm going to ruin you". He denies the allegation.

Adrian Williams, for the State of NSW, said misunderstandings occurred but it didn't follow that police were acting maliciously.

Jubelin "enthusiastically" investigated the case but had expressed "significant moderation and agnosticism" about Spedding's guilt, he said.

"He was going through the investigation in the way he thought was proper," Mr Williams said.

Attention has been drawn to a progress report in the homicide investigation that detailed specific elements of the Spedding criminal investigation, including plans to obtain statements from alleged victims and "another operational phase in which we tail Spedding".

Mr Canceri alleged it proved charging Mr Spedding over the abuse claims was "a centrepiece" of the Tyrrell investigation.

"Homicide detectives engaged in a very high risk strategy, and improper strategy of trying to gather inculpatory evidence for the investigation into the disappearance of William Tyrrell," he said.

But Mr Williams said the document shouldn't be read that way, and in fact showed how Mr Jubelin was meeting the needs of the two cases with limited resources.

Mr Spedding has claimed anxiety and depression he suffers was caused by the prosecution and the public attention it brought.

Media attention was "out of control" and in the view of the public, Mr Spedding was both a paedophile and William's attacker, Mr Canceri said.

"There needs to be a large amount (of exemplary damages) rewarded to discourage and deter other police officers," he said.

Justice Ian Harrison is expected to make a decision at a later date.