A Sydney court has been shown a public confrontation between a former suspect in the William Tyrrell investigation and an unknown woman, who told him she feared he might be "grooming" children.
William "Bill" Spedding is suing the State of NSW for malicious prosecution, wrongful imprisonment, misfeasance in public office and abuse of process over his arrest for historical child sex abuse charges in 2015.
Mr Spedding, who was acquitted of the charges, claims NSW Police used the case as a tactic to "crack" him as their main target in the Tyrrell investigation from September 2014.
On Wednesday, the NSW Supreme Court was played footage of an encounter between Mr Spedding, his wife and an unnamed woman who approached the couple outside their house in Lake Cathie.
In the footage, the woman tells Mr Spedding she did not want him on the street with a mobile phone and asked he not walk near a local community centre.
"I just would like to know that you would never have a mobile out here in case you're grooming my children," she says.
"I just don't want you around when there's so many children around.
"I need to express my anger."
The woman says she "couldn't sleep" and felt sick knowing Mr Spedding was living in the neighbourhood.
At the time, Mr Spedding had been released on bail after being charged with child sex offences dating back to 1987.
Mr Spedding said the allegations against him, which were dismissed by police in the 1980s, were "coaxed" out of two children in the context of a bitter legal battle.
The 70-year-old claims the historical case was dug up by detectives in April 2015 to "punish" him and make his wife "think differently" about him.
Mr Spedding, a white goods repairman, became a police suspect shortly after William Tyrrell was last seen at his foster grandmother's home in Kendall on September 12, 2014.
The tradesman was linked to the scene as he had repaired a washing machine at the home on September 9.
Mr Spedding has always denied involvement in William's disappearance and has never been charged.
On Tuesday, the court was played a string of abusive phone messages left for Mr Spedding including several death threats.
The court has also heard claims former lead detective on the Tyrrell investigation, Gary Jubelin, threatened to "ruin" Mr Spedding during an unrecorded interview in April 2015.
Mr Spedding said he has never mentally recovered from the stress of the investigation and his time spent in custody.
Mr Spedding's barrister Adrian Canceri attempted to tender comments made on a Facebook page concerning William Tyrrell's disappearance he said shows people still considered his client to be a "paedophile".
Despite Mr Spedding being cleared of the historical allegations, Mr Canceri said the comments made this month prove "negative publicity persists".
"The plaintiff has been branded a paedophile regardless of the historical allegations ending with a verdict of acquittal," he said.
"It's proof of the fact it continues to remain alive ... and will probably do so in the future."
Justice Ian Harrison, however, refused to allow the social media comments into evidence.
The state will open its case on Thursday, and will argue authorities acted appropriately in its investigation of Mr Spedding.
Mr Jubelin will be called as the last witness in the state's case, the court was told.
The hearing before Justice Harrison continues.
