Tony Robinson, 46, was at the Lavington park on June 11, 2017, where young families accused him of masturbating in close proximity to where the children were playing on the playground.

He pleaded not guilty after he was charged by police and the Mental Health Review Tribunal earlier this year found he was unfit to stand trial.

The court heard Robinson has chronic schizophrenia, which is treated by anti-psychotic medication.

Prosecutors chose to push ahead with the charges anyway, meaning the case was decided in a special hearing in front of District Court judge Sean Grant with limited evidence.

One of the children at the playground was aged under 10 and the other was under 16.

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Witness accounts from the families was presented to the hearing as evidence.

A women told police she "could see that the man was just staring at the kids ... he was slouched over with his hands on his crotch" then her partner said "look, he's just pulled his hands out of his pants".

"I am satisfied beyond reasonable doubt that the accused fondled his genitals on the outside of his clothing," Judge Grant said in his judgement yesterday.

But he said Robinson was not guilty of committing acts of indecency towards a child because there was no evidence his actions were directed "towards" the victims.

Robinson's defence barrister Christine Mendes argued that prosecutors had not proved that he intended for the children to know what he was doing, so he could not be guilty of that specific charge.

Judge Grant agreed, saying one witness statement had Robinson as far as 50 metres away, which meant the children would not have seen his actions.

"One may have sympathy for the parents of the complainants and feel disgust at the accused's action," he said.

The judge said Robinson could have been found guilty if police had charged him with "offensive conduct" instead, which did not require the children to see what he was doing and still carried a maximum sentence of three months in jail.

"The offence could have been proved on the evidence of the adult witnesses," Judge Grant said.

"All that is required is for the offender to conduct himself in an offensive manner in or near a public place. Masturbating at a park satisfies those requirements."