A man acquitted of terrorism after taking hostages in a dive shop south of Sydney was experiencing a psychotic episode and did not know possessing child abuse material was wrong.
Dressed in black combat fatigues and armed with a rifle, gel blaster and fake bomb, Simon William Fleming barricaded himself in a Windang dive shop with two employees on November 28, 2021.
In May during a NSW Supreme Court trial, Justice Helen Wilson ordered the jury to find him not guilty of engaging in a terrorist act.
Fleming also faced charges for using a firearm in a manner likely to endanger members of the public, detaining hostages, using a fake bomb to create a false sense of danger and unlawfully possessing gel blasters found at his home.
A special verdict was given for those remaining counts, which were proven to have taken place but without him being criminally responsible.
He returned to court on Friday, when the prosecution and defence pushed for the same verdict on a further charge against the Windang man of possessing child abuse material.
Justice Wilson considered two expert psychiatric reports in agreeing to hand down the special verdict over 82 videos and 2210 images held by Fleming on the day of the incident.
"The doctors are unanimous in their conclusion that Mr Fleming was, at the time of the alleged offence before the court, suffering from a mental health impairment," she said.
The forensic psychiatrists gave their opinion that he either had a schizo-affective disorder or schizophrenia.
One of the experts, Adam Martin, said Fleming was experiencing an episode of psychosis that distorted his judgment in addition to issues caused by his long-term struggles with pain and addiction.
Justice Wilson said evidence she saw during the trial, including footage of Fleming on the day of the hostage situation, supported the doctors' opinions.
Read more: Illawarra court and crime stories
"Video footage of the accused on the 28th of November 2021 certainly raises the clear prospect of him suffering a significant mental disturbance on that date even from the point of view of an untrained observer," she said.
Fleming has agreed to forfeit various items seized when police searched his home after the hostage situation, including his laptop.
The matter will come before the court on a future date for an argument about costs.
Lifeline 13 11 14
beyondblue 1300 22 4636
- with AAP
Sign up for our newsletter to stay up to date.