A judge has urged federal authorities to cover the legal costs of an "unfair" terrorism prosecution of a mentally ill man who took hostages in a dive shop.
Simon William Fleming was dressed in black combat fatigues when he fired a rifle at cars, before barricading himself in the dive shop on the outskirts of Wollongong on November 28, 2021.
He later surrendered to police and was subsequently charged with terrorism and firearm offences.
In May, NSW Supreme Court Justice Helen Wilson ordered Fleming be found not guilty of engaging in a terrorist act, citing a "longstanding mental health impairment".
She directed similar special verdicts on the firearm offences.
This week, in a judgment on costs, Justice Wilson labelled the prosecution of Fleming, who has severe schizophrenia, as an "injustice occasioned" to "a very ill and defenceless individual by the federal prosecutor".
The Crown had alleged Fleming was engaged in an act of terrorism, motivated by a desire to intimidate the Australian public and the government.
Justice Wilson said any public interest in the prosecution "evaporated" after prosecutors decided not to call a psychiatrist to give evidence, which the judge described as a move potentially made to suppress evidence of Fleming's mental illness.
"The decision could only have been taken because the Crown was unwilling to concede the availability of the mental illness/mental health impairment defence to Mr Fleming," she said.
After that date, the prosecution "conducted in the way that it was by those then appearing for the CDPP (Commonwealth Director of Public Prosecutions), was unreasonable and unfair," Justice Wilson added.
"The failure of a prosecuting authority to discharge duties fundamental to an accused receiving a fair trial is a matter of grave concern."
Justice Wilson conceded she was barred from ordering the Commonwealth to pay Fleming's costs but added that "subject to having the power to do so, I would order the CDPP to recompense Mr Fleming for the whole of the costs incurred by him".
She ordered correspondence be sent to the commonwealth attorney general and minister for finance urging a "payment to Simon Fleming, equivalent to the reasonable legal costs incurred".
The office of Attorney-General Mark Dreyfus and the CDPP declined to comment on the judgment when contacted by AAP.
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