Murray Deakin's bloody rampage began on June 1, 2018 when he discovered his motorbike had been moved from the driveway of the Bega house where he lived with his parents.

After asking his grandfather Thomas Winner where his bike was, he stabbed the older man with a pen-knife.

He then stabbed his grandmother Gail Winner, who had been unloading groceries from the car, four times in the chest, back and neck.

He later told doctors he thought his grandparents were vampires.

Deakin then led police on two dangerous car chases.

Retired highway patrolman Mick Horne saw Deakin speeding, called triple zero, followed him and eventually pulled up beside him when Deakin stopped.

Footage recorded on his wife's phone shows Mr Horne asking Deakin what he is doing and whose car he is driving.

Deakin made a snarling sound, turned around expressionless and told Mr Horne to "follow the code".

When Mr Horne asked for his name, Deakin sighed then pulled a hammer from his backpack. Mr Horne turned and ran, but Deakin hit him on the head multiple times as Melanie Horne watched on from the car.

Deakin later said he thought Mr Horne was a demon.

Mr Horne died two days later. Gail Winner died that afternoon, and her husband survived.

Justice Robert Beech-Jones on Friday found that Deakin could not tell right from wrong at the time of the attacks because he was gripped by a psychotic state caused by schizophrenia.

Three psychiatrists earlier gave evidence supporting the finding. The expert evidence caused prosecutors to accept on Wednesday that Deakin's plea that he was not guilty be reason of mental illness was made out, stopping the NSW Supreme Court trial.

The court found an alternative explanation - that Deakin's psychosis was caused by drug use, including cannabis and LSD - did not "withstand much scrutiny".

Deakin grew from an awkward, maladjusted youth into a "reclusive and seriously obsessed" young adult, Justice Beech-Jones said.

As a child he obsessively washed his hands, obsessively removed and grinded tap fittings, and added weights to doors to make them close faster.

At 18, he told his father he had been hearing voices. An employer at a nursery described him as "unemployable" and said he was obsessive with certain tasks.

His deterioration suggested developing schizophrenia.

Even if Deakin had taken LSD which precipitated his psychosis, that would only be a symptom of his schizophrenia, the judge said.

Deakin will be held in custody, with his case to be reviewed twice a year. He will only be released on an order from the mental health tribunal.

Justice Beech-Jones expressed the court's condolences to the Winner and Horne families.

"(The Winners') devotion was such that they were prepared to assume the burden of looking after their troubled grandson in their advancing years," he said.

Mr Horne died after following his instinct to protect the public, he said.

"All three primary victims deserve not to be defined or remembered by how they died, but how they lived," the judge said.

Australian Associated Press