Police should have arrested Man Haron Monis when 40 fresh sexual assault charges were laid against him two months before he stormed the Lindt Cafe in Sydney, it has been suggested by the Department of Public Prosecutions.

The gunman was on bail relating to sexual assault charges involving alleged events at his western Sydney spiritual healing clinic, dating as far back as 2002, when police laid the fresh charges in October last year.

But the coronial inquest into the deadly siege in December last year was told on Tuesday police decided to issue a court attendance notice in connection with the 40 additional charges, rather than arrest him.

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The inquest previously heard Monis had been granted bail three times in the 12 months before the siege: in December 2013, after being charged for being an accessory to murder; in May 2014, in relation to the three historical counts of sexual assault; and in October, on the fresh sexual assault charges.

Counsel assisting the Director of Public Prosecutions David Buchanan suggested on Tuesday to Detective Senior Constable Denise Vavayis, who led the investigation into the later sexual assault allegations, that police should have arrested Monis.

Mr Buchanan suggested the court would have been compelled to revoke Monis’s bail given the nature and seriousness of the new allegations.

Ms Vavayis replied that police did not arrest Monis because it could potentially have been deemed as unlawful.

“Mr Monis had already been on bail, he was complying with those conditions, he hadn’t not attended court before,” Ms Vavayis said.

The inquest on Tuesday again dealt with exchanges between Ms Vavayis and the DPP prosecutor in charge of the bail application related to the 40 additional charges.

Ms Vavayis insisted she passed on her reservations to the prosecutor, who cannot be named, after he advised there would be insufficient grounds to revoke the bail.

She made no formal protest but said the prosecutor “was expected to be the expert”.

“My job is to present him with the facts as they stand,” she said.

“Ultimately … we defer to his expertise in the field.”

It was revealed in the hearing on Monday that the prosecutor handling the application had only been on the job for two months when he advised there would be no reasonable prospect of revoking Monis’s bail.

“I told [the prosecutor] the fear of complainants was that Mr Monis had spiritual powers and would curse them,” Ms Vavayis said on Tuesday.

The prosecutor told her that while there were numerous charges against Monis, they were historical “and not sufficient to petition the court to change the bail”.

The inquest was given further insight on Tuesday of the challenges faced by the DPP in obtaining information about alleged offenders, particularly between jurisdictions.

Larissa Michalko, a solicitor with the DPP who appeared in a bail application in May 2014 related to the initial sexual assault charges, highlighted the failings in the system, which meant some matters are not even recorded.

Asked if she believed the system would improve if there was a national database that recorded an offender’s criminal history, Ms Michalko replied: “That would be a godsend.”

Lindt Cafe victim Tori Johnson, 34, was forced to kneel before being killed with a shotgun blast to the head, while Katrina Dawson, 38, was killed by fragments of a police bullet or bullets as the siege came to an end on December 16.

The inquest resumes on Wednesday.

-AAP