Documents released under freedom of information laws have shed light on what authorities last year called "an unfortunate misunderstanding" that resulted in the heritage cottage being destroyed without the ACT Heritage Council's approval.

The documents show the council approved demolition of the main house on the Palmer Street block – known locally as Ottocliffe – on April 20, 2016, after the house was found to contain Mr Fluffy loose-fill asbestos.

The council's statement of heritage effect approval related only to the main house and made no mention of the stone cottage, which was free of asbestos.

The freedom of information documents reveal that in May 2017, while still a prospective buyer, the new owner of the property emailed ACT Heritage and sought advice on the stone cottage.

An unnamed ACT Heritage employee replied a week later and gave the new owner contact details for the ACT Heritage Advisory Service, which is a free service provided by Philip Leeson Architects and supported by the ACT government.

The block sold for $985,000 at an auction in late May 2017, and land title records show Stephen and Deborah Fleischer were granted a 99-year lease for the block a month later on June 26.

Mr Fleischer has previously told the Sunday Canberra Times he believed he had all the necessary approvals to demolish the stone cottage.

According to the freedom of information documents, David Hobbes, of Philip Leeson Architects, inspected the stone cottage to assess its heritage significance on August 16, 2017.

"In my opinion this structure does not have heritage significance," Mr Hobbes wrote in advice given to the property's new owner and ACT Heritage.

"It appears to have been constructed from a variety of salvaged materials over a period from the 1950s to the present."

Former Ottocliffe owners have asserted that the cottage was built by the pioneering Southwell family before 1900 and that it was one of the earliest buildings in Hall, while a 2000 heritage study of Hall also refers to the cottage as a heritage structure.

The freedom of information documents say while Mr Hobbes' advice came from a government-supported service, the advice had "no statutory effect" and the stone cottage was demolished on October 3 and 4, 2017.

On October 11, a week after the cottage was demolished, ACT Heritage team leader Meaghan Russell sent a lengthy email to the Environment, Planning and Sustainable Development Directorate's legislation team, seeking advice on whether the demolition contravened the Heritage Act.

Ms Russell said in the email that according to the Asbestos Response Taskforce, the 'retained improvements schedule' annexed to the sales contract for the property clearly identified that the stone cottage was subject to heritage requirements.

The reply she received from the legislation team two days later said "there would appear to be reasonable grounds for Heritage to proceed on the basis that actions taken were likely to amount to a breach of section 74 of the Heritage Act".

But following an Access Canberra investigation, the ACT government decided not to prosecute anyone involved in the cottage's demolition because it felt there were no reasonable prospects of conviction.

The decision angered Hall residents, who told the Sunday Canberra Times in December they feared for Canberra's built heritage if no action was taken over unauthorised destruction of heritage buildings.

The ACT government ruled that releasing a copy of the report on Access Canberra's investigation as part of the freedom of information request would be "contrary to the public interest" and withheld the document.

According to Heritage Minister Mick Gentleman, the process of establishing "strict liability penalties and repair provisions" under the Heritage Act has begun in the wake of the cottage's destruction.

In a letter to Hall resident Jonathan Palmer, one of those who spoke out after the demolition, Mr Gentleman said the Environment, Planning and Sustainable Development Directorate was also sending "educational letters" to the people involved in the demolition of the cottage to improve their understanding obligations under the Heritage Act.