There was an unsettling moment in the normally demure Leveson Inquiry last week.

As the 10 May hearing began Lord Justice Leveson announced he would be calling Independent on Sunday editor John Mullin to appear to discuss an article published the previous Sunday Leveson said disclosed details included in Andy Coulson’s confidential witness statement.

Coulson, the former News of the World editor and David Cameron’s ex-communications chief, was due to appear that afternoon. Under Inquiry protocol, witness statements are confidential, and Leveson has made clear his distaste for leaks, issuing restriction orders under section 19 of the Inquiries Act that prohibit prior publication of the statements outside of the Inquiry’s confidentiality circle.

Summoned under section 21 of the Inquiries Act, Mullin appeared, and was robust in his defence: he told Leveson that the story — which revealed Coulson held shares in News Corp while working at No. 10  — had been confirmed by three sources before the leaked copy of the witness statement came to his attention on the Wednesday evening prior to publication.

He said he was aware of the Inquiry’s restriction order but believed it did not apply to the story, as none of the sources relied on Coulson’s statement.

It quickly became rather unsettling, with junior counsel David Barr questioning why Mullin had read the statement at all and implying it was used as a fourth source for the article. A defiant Mullin did not budge, repeating that the story had been confirmed — “copper-bottomed” in his words — by the time the statement reached him.

“We didn’t use the statement as a source,” he told the Inquiry, adding:

We may not be the world’s greatest newspaper, in fact we may not be the greatest newspaper in our own building, but we’re good honest journalists and we try and do our job as best as we can do it.  This is an issue of massive public importance. The fact that your Inquiry is going on shouldn’t stop us from doing good honest journalism as we go ahead. It was our misfortune that through good honest journalism we got this statement after we had already substantiated the story.

Later in the week Leveson said he would not pursue action under Section 36 of the 2005 Inquiries Act against the newspaper.

Even for an interested (and, if I may say so, pretty dedicated) Leveson watcher such as myself, exchanges of the Barr-Mullin kind made me question the Inquiry. Mullin explained clearly how he believed he did not break the restriction order; was it necessary for Barr to press further on the other three sources?

Besides being unnecessary, it was futile: journalists don’t reveal sources. At that moment, the gulf between the lawyers brought into examine the standards of the press and the journalists giving evidence had never seemed so wide, or so problematic.

In printing the Coulson story Mullin had done what good editors do: fill their pages with informed and readable content that serves the person buying the newspaper.

The judge might be a few months away yet from setting in stone his recommendations for what the country’s press regulation system should look like, but watching a lawyer trying to get a newspaper editor to shed light on his sources did little to calm fears of a chilling atmosphere towards the press and freedom of expression.

These fears aren’t just speculation: various crime correspondents across regional and national titles told the Inquiry during their evidence in the second module that previously open channels of communication between them and police forces had been shut down (see here, here and here).

The episode might have been nothing more than a roadblock, and Leveson has said that no inferences should be made from the orders he issues and his approach to press regulation.

But Mullin summarised it perfectly when he said the Inquiry — fascinating and illuminating though it may be — should not stop good, honest journalism.

To do so would go against the freedom and diversity of expression that British newspapers are built on.

Marta Cooper is an editorial researcher at Index, where she covers the Leveson Inquiry. She tweets at @martaruco