As a gunman armed with a sawn-off shotgun and suspected of carrying a backpack bomb held people captive inside Sydney's Lindt Cafe, senior police described the hostages' behaviour as appearing "jovial".
The comment was made during a briefing among senior officers some 12 hours after Man Haron Monis stormed the Martin Place cafe in December 2014, an inquest has heard.
Assistant Commissioner Mark Jenkins took command of the siege at about 10pm on December 15.
During a handover, he was told negotiators had not yet made contact with Monis, and the gunman's requests for a flag and meeting with the prime minister had been refused.
Mr Jenkins said he was told death or serious injury, or an imminent threat of either, would trigger an emergency action and see police officers storm the building.
A senior officer present at the meeting spoke of "hostages moving around freely" and appearing casual and jovial.
Mr Jenkins said he could not recall who made the comment, but remembered taking some comfort from it.
"I must say it gave me a little comfort that they (were) able to move around (and) weren't restricted," he told the inquest.
Counsel assisting the inquest, Jeremy Gormly SC, pressed Mr Jenkins on using the word "jovial" during a crisis.
"It's a remarkable word in the context, isn't it?" Mr Gormly asked.
"It does appear to be, yes," Mr Jenkins replied.
That night Mr Jenkins was also shown a profile of Monis' criminal history, detailing arrests in connection with sexual assaults and a murder.
"The fact he'd been charged with those offences was of course a concern ... I just drew some little comfort from the fact he'd worked through third parties," he said.
Mr Jenkins said he was confident a "contain and negotiate" strategy would bring a peaceful resolution to the siege.
The inquest heard that by about 11pm, senior police learned Monis had instructed hostages to call their loved ones.
Mr Jenkins said this wasn't considered a direct threat of violence, and despite the report, senior police still considered the mood inside the cafe as "relatively calm".
By 1.18am, Monis had threatened to start shooting hostages within 10 minutes if the lights in Martin Place weren't turned off.
Mr Jenkins said the demand was considered a dramatic change in circumstances and was being actively explored.
He considered the demand a positive breakthrough, the inquest heard.
"I was as upbeat as I had been all night that we had a request or a demand that we might be able to accede to," Mr Jenkins told the inquest.
Police were forced to act when Man Haron Monis fatally shot cafe manager Tori Johnson at point-blank range at 2.13am on December 16.
Barrister Katrina Dawson was killed when she was hit by a fragment of a police bullet as they stormed inside.
Monis was also killed in the emergency action.
Mr Jenkins is expected to resume giving evidence at the inquest on Tuesday.
