Crown prosecutor Margaret Cunneen, SC, said Peters walked into the Pulvers’ Mosman home when he was targeting one of their neighbours.

“This offender got the wrong house,” Ms Cunneen told the Downing Centre District Court during a sentencing hearing. “He didn’t appreciate the layout of the respective houses.”

Ms Cunneen said Peters’ real target was linked to the US-based James M Cox Trust.

During his investigation into the original target, who cannot be named, former merchant banker Peters identified a man he knew to be wealthy and changed his mind.

“He recognises someone he knew from working in Hong Kong,” Ms Cunneen said.

“Having spoken to this man, who lives in the same battle-axe block, that becomes the target.”

After changing his target, Peters then simply got the wrong house, with Ms Cunneen saying he was “fallible and ultimately incompetent in his aims”.

Peters gave a story about being in a deluded state and that he was acting out one of the characters in his book.

“But where is this book?” Ms Cunneen said.

The judge Peter Zahra had previously spoken about Peters claim that his attack on 18-year-old Pulver was due to bipolar disorder, drinking and depression.

“He went into this place with precision … with his balaclava on and the device in his backpack,” Judge Zahra said.

“Within a couple of minutes the victim, studying for her exams, was made compliant by what she was confronted with. In my mind he planned this and implemented it with precision.”

Peters’ barrister, Tim Game, SC, argued that psychiatric experts had deemed his client to be suffering from bipolar disorder and depression, and that he also had an obsessive personality.

“This was behaviour that was bizarre in the extreme,” Mr Game said.

“There were no instructions to pay any particular sum of money to anyone … it was not rational, logical behaviour.

“It is open to your honour to find, on the balance of probabilities that [Peters’] personality had substantially disintegrated. You’re talking about someone who is completely isolated … has no social contact with their family or friends, and is obsessively writing a novel … That does go to a substantial reduction in criminal culpability.”

Peters pleaded guilty in March to aggravated break and enter and detaining for advantage.

Madeleine Pulver was in the midst of her Higher School Certificate exams in August 2011 when Peters went into her family’s home wearing a balaclava and strapped a collar on her. This led to a 10-hour ordeal before which the bomb was found to be fake.

The hearing continues ahead of sentencing by Judge Zahra on November 20.

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