Six hours after Brian Liston was stabbed to death, the man accused of his murder faced a police interview.

The man, who cannot be named, wore a blue forensic jumpsuit and had paper bags taped over his hands.

At one stage he held the bags a short distance apart, to show the size of the serrated knife he used to carry out the attack.

It was 2.30am on December 11, 2015, and two officers from Newtown Police Station asked the man what happened.

"What's your understanding of the situation?" one of the officers asked.

The man responded: "That I'm going to jail for a while. That's my thoughts."

Officer: "What do you think you're going to jail for?"

Man: "Stabbing someone".

During the interview, played at a special hearing of the NSW Supreme Court on Monday, the man later said he was inside his unit when he spotted someone at a bus stop outside who looked "shady".

He went outside to "give him a yelling" then "stabbed him a bit" instead.

Mr Liston, a teacher, was waiting for a bus on Salisbury Road in Camperdown at about 8.30pm on December 10 after his regular German class.

Witnesses saw a man approach the 51-year-old and speak to him for about five seconds before stabbing him in the chest.

Mr Liston began screaming.

"You've just stabbed me," he shouted. "I've been stabbed."

Mr Liston jumped up and attempted to move away, taking off his shoe and throwing it in an attempt to defend himself, but his attacker followed, grabbing him on the back of the shirt and stabbing him a further five to 10 times.

He attempted once again to run, but tripped over in the street and landed on his back.

Multiple witnesses saw the attacker approach Mr Liston, bend down towards him, and grab his hair with his left hand.

With his right hand, he "slowly and deliberately" stabbed him in the face and neck with a 15-centimetre knife.

Several witnesses ran to his aid, including Parmajeet Pal, who ran from a nearby unit and delivered a "flying kick" to the attacker's back after hearing screams of, "Somebody help me, he is going to stab me to death."

Mr Liston was rushed to nearby Royal Prince Alfred Hospital but died shortly afterwards from one of the stab wounds, which went into his lung and heart.

His alleged killer, 29, has been found unfit to stand trial due to his mental health.

Two psychiatrists told the Supreme Court hearing the man has severe schizophrenia.

Dr Richard Furst, a consultant psychiatrist, said the man was first diagnosed with the condition in 2006 and since then had spent only "brief" periods out of hospital.

"The accused suffers from a chronic and treatment-resistant schizophrenic illness which is severe in nature," Dr Furst said.

"There is a failure to respond to two different classes of anti-psychotic medications within a reasonable period of time.

"[He] is on the more extreme end of the illness."

The man leaned forward in the court dock as the interview was played.

Justice Geoffrey Bellew is due to deliver a judgment in the case on Tuesday.