Deputy NSW Police Commissioner Peter McKenna gave evidence on the protest as he faced the Royal Commission into Anti-Semitism and Social Cohesion on Tuesday.
About 60 black-clad men held a banner reading "abolish the Jewish lobby" during the seven-minute protest on November 8, 2025.
Mr McKenna said police were advised they could not disrupt the rally after organisers lodged an application for protest authorisation, known as a form one.
The application, lodged nearly two weeks prior to the rally, detailed White Australia Party's intentions in explicit terms.
"The (internal legal) advice, in essence, was … no offence appeared to be committed by the formation of the White Australia Party at that location," Mr McKenna said.
"While some things are abhorrent and offensive, if they don't meet the threshold of breaching the law, then we fall back to the fact people have a right to public assembly."
Officer briefings flagged the nature of possible offences, but no arrests were made on the day.
Further analysis and legal advice led to the arrest of neo-Nazi leader Joel Davis, later charged with publicly inciting racial hatred and causing fear.
"(Police) would always defer to the lawyers in these types of matters where they are complex, they're nuanced," Mr McKenna said.
He said human error meant police did not notify the Jewish community before the rally.
"I understand why that would upset the Jewish community, and they have our deepest apologies," he said.
The commission earlier investigated circumstances surrounding an incendiary rally at Sydney Opera House two days after Hamas' attack on Israel in 2023.
Some at the Opera House allegedly yelled offensive chants including ''f*** the Jews" while the landmark was illuminated in the white and blue colours of Israel's flag.
NSW Jewish Board of Deputies president David Ossip criticised police for "transferring control" to protesters before the rally.
Advice to Jewish groups to recommend others avoid the city was an outrageous and extraordinary dereliction of duties, he said.
Mr McKenna did not confirm or deny the warning.
Mr Ossip labelled it a scene of international disgrace and infamy.
The commission did not directly question organisers of pro-Palestine rallies.
Dominic Toomey, counsel for Palestine Action Group, however sought to distance organisers from those behind offensive chants across two cross-examinations.
Associate Professor Mario Peucker gave evidence on social cohesion, protests and radicalisation.
The commission was told those given a chance to express dissent through protest were less likely to become further radicalised.
Repressive policing of protests could cause fragmentation and strengthening of radical flanks within political movements, he said.
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