Mark Johnston disappeared after meeting friends at the Bellevue Hotel in Paddington on September 1, 1986.
Human remains found on a construction site of a desalination plant in Kurnell in October 2007 were left unidentified until December 2019 when DNA evidence confirmed the bones belonged to Mr Johnston.
On Wednesday, state coroner Teresa O'Sullivan confirmed the manner of death had been homicide by a "known person" at Johnston's solicitor's home in Dover Heights.
"I agree ... that Mr Johnston's remains were buried for the purpose of disposing of his body and concealing his homicide," the magistrate said.
"I am also satisfied that the evidence establishes that the person responsible for his death was Arthur Smith."
Ms O'Sullivan was unable to determine the precise cause of death, however.
On February 15, 2021, police investigators from Strike Force Brompton visited Smith at a secure ward at Prince of Wales Hospital.
"I've got nothing to say," he said when asked about Johnston's disappearance.
When police inquired if he knew what had happened to Johnston, Smith replied: "No, do you?"
The convicted murderer died of Parkinson's disease in Long Bay's prison hospital aged 76 on September 8, 2021.
At an earlier inquest in May 1999, deputy state coroner John Abernathy found there was enough evidence to prove beyond a reasonable doubt that Smith had "committed an indictable offence" relating to Johnston's death.
In August that year, the Director of Public Prosecutions declined to initiate proceedings against Smith or any other person.
A second inquest was held in November 2013 after the bones were uncovered and DNA was collected and entered into a missing person's database. No conclusive findings were made at that point.
Smith was accused of numerous murders in the 1970s and 1980s during Sydney's gangland wars.
When he died, he was serving two life sentences for the murders of brothel owner Harvey Jones in 1983 and tow-truck driver Ronnie Flavell in 1987.
The principal witness at a NSW Independent Commission Against Corruption inquiry exposing corruption between the NSW Police and criminals, Smith said he had bribed numerous senior detectives and had been given a "green light" to commit crime from 1981.
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