The State of NSW was ordered to pay Mr Spedding the $1.5 million in December last year after police maliciously prosecuted the washing machine repairman while looking into the three-year-old's whereabouts in September 2014.
On Wednesday, the tradesman resisted an appeal by NSW against this amount, saying it was warranted given the ill will police had towards Mr Spedding when he was a suspect in William's alleged kidnapping.
A strategy conceived by then inspector Gary Jubelin brought allegations of historical child sexual abuse against Mr Spedding in 2015 to gain evidence from him about William's whereabouts.
Mr Jubelin's decision to "pull a trigger on a guy's life" ended up "destroying" Mr Spedding, barrister Paul Blacket SC told the NSW Court of Appeal.
"It's as bad a case in Australian legal history in respect of malicious prosecution as you can get," the barrister said.
"The only merciful thing is he didn't serve a term of imprisonment before being pardoned or acquitted."
The charges had been concocted with the two child complainants being "tutored" by others on what to say, the court heard.
Police did not supply all relevant information to the Director of Public Prosecutions when the charges were laid, and omitted crucial details such as a statement from one key witness who said nothing happened at the time of the alleged assaults.
The charges and the surrounding media publicity meant Mr Spedding was assaulted in the street, was refused service and forced to move home.
"He was hounded for years and years and years. He was then unable to attend weddings, funerals, birthday parties, Christmases, significant events in his social life," Mr Blacket said.
The "concerted campaign" inextricably linking the historical allegations with the William Tyrrell investigation was designed to embarrass and humiliate Mr Spedding, the court heard.
"Lost children or missing children is a very emotional topic. By placing Mr Spedding in the position where he was the likely perpetrator was to place him in an almost invidious position," Mr Blacket told the court.
Mr Spedding also took aim at the DPP's decision to continue with the case, saying that even with information hidden by the police, prosecutors should have known the allegations were weak and flawed.
Signs the allegations could not have succeeded included that the two complainants had either very spotty memories of what allegedly occurred or could not remember anything untoward happening.
The two alleged victims had also had their memories contaminated by frequent discussions with others about sexual anatomy when they were young, including through the use of dolls.
"A serious question would have arisen as to the reliability of the principal crown witnesses," Mr Blacket told the appeals court.
The hearing continues.
