She claimed that on the night of the incident the nurse hugged her, touched her breast and genitals, then performed an indecent act on her.
But the Health Practitioners Disciplinary Tribunal has ruled that the patient initiated the hug and put the nurse's hands on her body. He has admitted the indecent act.
The morning after the incident, which happened in 2016, the patient woke up in a state of disorientation and said she had been sexually assaulted.
The nurse was charged with indecent assault and sexual violation and was put on trial before a jury, but the charges were dismissed during the trial.
The judge found guilty verdicts based on whether or not the woman had the ability to consent were unsafe verdicts. The decision acknowledged sexual activity had taken place, and no finding was made on consent.
The matter has now come before the Tribunal, which yesterday ruled the nurse had committed professional misconduct, regardless of whether the woman was capable of consenting. They also rejected a charge that the nurse had violated the woman.
Barnett-Davidson today said it was an "unusual" case of sexual contact with a patient because it did not involve sexual violation or predation, nor did it involve the forming of a relationship.
She said the sexual contact was serious and "a completely inappropriate response to the patient's actions which [the nurse] did not succeed in stopping]".
But she said he was "taken by surprise" and "froze in his reaction", and that the incident was a "one-off sudden situation".
She said the patient instigated the sexual contact for the purpose of following up and attempting to blackmail the nurse.
There was no further evidence of the blackmail accusation in Barnett-Davidson's written submissions.
Director of Proceedings Kerrin Eckersley said the allegation was "strongly disputed" by the patient during the criminal hearing.
A consultant psychiatrist assessed the nurse as being at low risk of behaving this way in the future, and not being at risk of "predatory conduct".
"He accepts that he should be punished, however because this was one brief, poor judgment in time, it is submitted that the Tribunal can consider the option of [the nurse] being considered able to be rehabilitated as a young health practitioner," Barnett-Davidson said.
She argued his registration should not be cancelled, but that a period of suspension was appropriate.
It has taken nearly four years for the case to come to the Tribunal, meaning his suspension had already effectively been in place for a number of years, she said.
Eckersley argued cancellation was the most appropriate punishment for the nurse, saying he had ample opportunity to extract himself from the situation but instead escalated it by performing the indecent act.
The nurse said he was afraid of being accused of sexual assault, which was why he did not leave when the woman initiated the contact. He said he had no other option but to commit the act.
Eckersley said his case was "squarely within the most serious cases of sexual misconduct".
"It would be sending entirely the wrong message to the profession, and almost more importantly, the public if cancellation were not ordered."
Aggravating features of the conduct included the fact the patient was "very vulnerable" and on a high dose of diazepam at the time.
At the time, the nurse had responsibilities to eight other patients, and he committed the act while three patients slept in the same room.
The nurse is also fighting to keep his name suppressed, on the grounds it would affect his mental health, ability to work in the future, cause emotional harm to his wife, and jeopardise their safety.
His name was not permanently suppressed in the criminal court, however.
The Tribunal is expected to make a decision on penalty and name suppression tomorrow.
