"It is too traumatising to describe what this experience was like," Mr Wood said in a statement before the NSW Supreme Court. "Jail must be unbearably difficult even if one is guilty, but as an innocent man it was unimaginable.

"Doubly so for having been falsely accused and wrongly convicted of killing the woman I loved and intended to marry."

Mr Wood, 54, said he was king-hit by a notorious killer and rapist in jail, had his reading glasses smashed by a "vindictive" guard, was frequently threatened by other inmates, and was undernourished to a point at which his eyesight began to fade.

He was jailed in 2008 after being convicted of murdering his girlfriend Caroline Byrne, whose body was found at the bottom of a cliff at The Gap, in Watsons Bay, in June 1995.

The Court of Criminal Appeal acquitted Mr Wood in 2012, and he is now suing NSW for malicious prosecution, seeking millions of dollars in damages.

Even when Mr Wood walked free from jail on a February evening, he did not feel happiness, only relief for his loyal family and friends.

"It is hard to feel happy about having freedom reinstated when it should never have been taken away in the first place," Mr Wood said.

"I was immediately ill, vomiting and struggling to keep food down, and I quickly sank into a deep depression. I did not expect this."

Mr Wood said he was unlikely to move forward because his reputation was forever tarnished.

"Although free and, for now, at least protected from the conduct of the NSW Police, it is upsetting to realise and accept that I face a future with limited prospects in terms of lifestyle, a loving relationship, and the ability to earn a respectable living."

His psychiatrist, Robert Hampshire, said Mr Wood suffered from a major depressive disorder.

"He's always the same: agitated, depressed almost ... maudlin," Dr Hampshire said. "It's more like an agitative depression, talking fast, sometimes moving fast."

Dr Hampshire said Mr Wood had paranoid ideas about jails and police.

"He formed a view, and the view grew post-trial, that police might somehow fit him up for some other crime."

Mr Wood told Dr Hampshire he would not be able to find a job in the finance industry due to coverage of Ms Byrne's death.

"He said as soon as they do a search, it comes up 'Gordon Wood cliff murder'," Dr Hampshire said. "I believe him, it would extremely difficult to find work – it would be different if he was a truckie or something."

The hearing continues before Justice Elizabeth Fullerton, and the court is expected to take a view at The Gap this week.