William Tyrrell's former foster mother said she had done something wrong as she hugged a child being removed from her care over abuse allegations, a court has heard.
"I've done something I shouldn't have done," the foster mother told the crying child, according to the woman who served the paperwork.
The ex-foster parents, a 58-year-old woman and her 56-year-old partner, returned to Parramatta Local Court on Friday.
The foster mother has pleaded guilty to hitting the child with a wooden spoon in January 2021 and kicking them in October, but is fighting two intimidation charges from January and August 2021.
The woman's partner has pleaded not guilty to allegedly grabbing the child's neck in October 2021 and intimidation in November 2020.
Neither the foster parents nor the child can be identified for legal reasons.
Megan Payne, a NSW Department of Communities and Justice official who served removal papers in November 2021, said the child cried and hugged the foster mother.
"(The mother) said: 'It's not your fault … I've done something I shouldn't have done'," Ms Payne told the court.
Emma Ballard had counselling sessions with the child in September and October 2021 and said the child did not like the foster parents' rules.
The foster mother's lawyer, John Stratton SC, asked if the child reported being assaulted, intimidated or verbally abused.
"(They) did not indicate that any of that had happened," Ms Ballard said, although she confirmed she had not asked directly.
The child reported feeling excluded and annoyed when a younger child was placed in the home and responded by refusing to do chores and homework, stomping around the house and slamming doors.
"All of (their) behaviours did seem age-appropriate," Ms Ballard said.
Mr Stratton argued the interactions captured on covert recording devices by police investigating William's disappearance only captured questionable parenting.
Three-year-old William vanished from a Kendall property belonging to his foster grandmother on the NSW mid-north coast in 2014, but no one has been charged over his disappearance.
Mr Stratton said the prosecution had not made out a case against the foster mother, beyond a July 2021 comment aimed at the child.
"If I get that attitude ... I'm going to slap you across the face," the woman said.
Another covert recording captured the woman describing the "putrid" state of the child's underwear.
"It may not amount to good parenting … one thing it certainly isn't is a threat of injury or violence," Mr Stratton said.
Prosecutor John Marsh said the foster mother should have known her actions would still cause the child to fear her.
"She's refusing to buy new underwear for a child in care and telling (them) that (they) smell like a homeless person," he said.
Other evidence included a phone call in which the woman referenced a need to "break" the child.
"Needing to 'break' any child, particularly one in out-of-home care … absolutely establishes a situation where she knew her actions were likely to cause fear but nonetheless continued," Sergeant Marsh said.
Magistrate Susan McIntyre rejected Mr Stratton's argument, saying the covert recordings - while somewhat unusual in their availability for the case - were credible and objective evidence.
"Ultimately the evidence in a situation like this speaks for itself," she said.
Ms McIntyre said she could not consider them merely throw-away comments or things the foster mother said without meaning for them to have an impact.
"It simply flies in the face of the words that were used that I would construe them in that way," she said.
The magistrate ordered written submissions from the parties before returning to court in December with plans to deliver a judgment in February.
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