Shane Diehm, who was second-in-charge in the Byron Bay area, tested positive to cocaine following a retirement party for former superintendent John Alt at a Paddington pub in 2011.

He was also covertly captured supplying and taking drugs during a boys' weekend away to the Gold Coast in 2010 with Mr Alt and several other serving and retired officers.

On Monday, the Downing Centre Local Court heard that the Police Integrity Commission inadvertently discovered Mr Diehm’s involvement with drugs during an investigation into Mr Alt.

While police were intercepting Mr Alt’s telephone calls about sourcing drugs for the boys’ weekend, they also became aware that Mr Diehm was attending.

Two hidden cameras were installed in their Victoria Square Apartments unit and captured the men talking about hash cookies and pills, a court heard.

He was only charged over the Gold Coast incident this month and appeared in a Queensland court on March 14 on drug possession.

At a subsequent PIC inquiry into drug use in the police force, Mr Diehm, 49, allegedly lied about taking drugs or knowing whether other officers had taken drugs.

After being played surveillance footage from the Gold Coast apartment, he allegedly admitted that he had lied but said his memory of the weekend was poor.

He has been charged with four counts of giving false or misleading evidence at a hearing before the Commission.

On Monday, Mr Diehm’s legal team made an application to Magistrate Ellen Skinner to have the matter dealt with under mental health legislation because he was suffering from post-traumatic stress disorder and depression, which affected his ability to tell the truth to the Commission.

Dr Olav Nielssen gave evidence that Mr Diehm went to a psychiatrist for the first time three days before he gave evidence to the Commission and was diagnosed with post-traumatic stress disorder and depression.

‘‘He told me that he was very anxious on the day and that affected his performance in front of the commission,’’ he said.

The stress of his job contributed to regular binge drinking sessions with fellow officers and he was too drunk to remember whether other people took drugs on the weekend away, Dr Nielssen said.

Prosecutor Christian Hearn said no mental issues were identified in an assessment done years earlier and he questioned why Mr Diehm only sought a medical diagnosis days before he was due to appear before the Commission.

The Professional Standards Command received a tip-off about cocaine use at the Paddington event and ordered drug tests the next day on Mr Diehm, Inspector Matthew Dennis, who was stationed in the Hunter Valley, and Australian Federal Police Sky Marshal Darren Kolosque.

Mr Diehm and Mr Dennis were sacked and Mr Kolosque resigned.

The hearing continues.