Tradesman and former Tyrrell suspect Bill Spedding was awarded the mammoth amount in December last year after police accused him of historical child sexual abuse in 2015 to pressure him to give evidence about the three-year-old's whereabouts.
This strategy, created by then inspector Gary Jubelin, consisted of "concocted and false" allegations against Mr Spedding for a collateral purpose, NSW Supreme Court Justice Ian Harrison said in awarding the $1.5 million.
Mr Spedding says this approach by police destroyed his life and that a large sum in compensation was warranted as sufficient punishment.
The State of NSW has since appealed the decision, arguing that while the three police officers who pursued Mr Spedding were named in his lawsuit, no one in the Office of the Director of Public Prosecutions, which ran the doomed child sexual abuse case in the courts, was identified.
This made it impossible to determine whether anyone in the ODPP had also acted maliciously towards Mr Spedding or had colluded with police, the NSW Court of Appeal heard in June.
The three-judge panel will hand down its judgment on Wednesday.
With police unable to find that Mr Spedding had anything to do with William's 2014 disappearance, they have not formally charged anyone else in the nine years since.
In June, a police leak alleged that William's foster mother had been recommended for prosecution by the ODPP.
Police alleged the woman, who cannot be named for legal reasons, might have disposed of William's body following a fatal accident at a property in Kendall, on the NSW mid-north coast.
No charges have been brought and the foster mother has always denied having anything to do with William's disappearance.
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