A washing machine repairman has accused NSW Police of "reputational damage" and is seeking up to $1 million in compensation after his name was linked to the disappearance of toddler William Tyrrell.

Key points: Bill Spedding denies involvement in William's disappearance and denies allegations he is a paedophile

Bill Spedding denies involvement in William's disappearance and denies allegations he is a paedophile Police charged Mr Spedding with historical sex offences but all were dropped or dismissed due to no evidence

Police charged Mr Spedding with historical sex offences but all were dropped or dismissed due to no evidence His legal team allege the charges were laid as part of a smear campaign and to pressure him

Represented by defence lawyer Peter O'Brien, Bill Spedding, 65, is filing a suit in the NSW Supreme Court for misfeasance in public office, abuse of process and malicious prosecution.

The Bonnyhills resident became a "person of interest" not long after three-year-old William went missing from his foster grandmother's home at Kendall on the state's mid-north coast almost five years ago.

Over the past few weeks, a coronial inquest heard how there was a "low threshold" for someone to become a "person of interest" in the high-profile case, but that it did not make someone a suspect.

Three days before William vanished, Mr Spedding visited the Benaroon Drive property to offer the foster grandmother a quote on a broken washing machine.

That work trip changed his life forever.

The name "Bill Spedding" was thrown into the media spotlight when a Spider-Man toy was found in his van early during the investigation into the disappearance of William, who was wearing a Spider-Man suit at the time.

The ABC has learned all three of Mr Spedding's grandchildren told police it was purchased from a secondhand shop.

Tip-off led to investigation

The ABC has been told police received a tip-off from a mystery person that Mr Spedding was a paedophile.

Police investigated the allegations and charged him with historical child sex offences, but all of them were dropped or dismissed because there was no evidence.

Mr Spedding has always denied these allegations and his legal team allege the charges were laid as part of a smear campaign to put pressure on him.

Evidence heard at the coronial inquest revealed Mr Spedding was nowhere near Kendall when William disappeared on September 12, 2014.

On the same morning, his wife Margaret said she had breakfast with her husband about 9:45am in Laurieton, about 20 minutes' drive from Kendall.

The couple said they then attended a school assembly across the road at 10:30am because a child in their care was receiving an award.

Former journalist and Laurieton resident Gordon Wiegold backed up their evidence, telling the inquest that he saw Mr Spedding at that assembly.

No-one has ever been arrested or charged over the disappearance of William and a $1 million reward remains in place for information that could solve the mystery.