Giving evidence in the murder trial of Christopher Michael Dawson on Tuesday, former Detective Sergeant Paul Maygar said the investigation was suspended in May 1992 after discussions with either the coroner or Director of Public Prosecutions.
"I raised the issue of witness testimony and statements of the police that Lynette Dawson had been seen a week after her supposed disappearance, and I was advised that unless we could refute that evidence, the investigation probably shouldn't proceed," he said.
Mr Maygar was part of the major crime squad located at Chatswood, Sydney. He examined the January 1982 disappearance of Mrs Dawson in the early 1990s.
Dawson, now 73, was charged with the murder of his wife in 2018. Crown prosecutors allege he killed her and disposed of her body in January 1982 so he could have an unfettered relationship with one of his former high school students, known as JC.
He has pleaded not guilty to the charge and claims Mrs Dawson left home and did not contact her family afterwards.
In a 1991 police interview, Dawson told Mr Maygar that his wife had been spotted by family friends Sue and Ray Butlin on the Central Coast a week after she allegedly left her marital home in the Sydney suburb of Bayview.
In court on Tuesday, Mr Maygar said he had not spoken to the Butlins in the course of the investigation. He suggested this would have been something they intended to do, but said the crime squad's heavy workload meant newer cases took priority over older ones.
"Matters such as this that weren't fresh, weren't alive so to speak, got pushed to the back," he told the NSW Supreme Court.
Earlier this month, Mr Butlin told Justice Ian Harrison that his wife had briefly seen Mrs Dawson at a fruit stall on the Pacific Highway north of Sydney before she got into a car and drove off.
The judge-alone hearing continues.
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