A Sydney man who fatally bashed Rose Tattoo rocker Angry Anderson's Liam while high on ecstasy has not been found guilty but of manslaughter.

Matthew Flame, 22, told police he "lost his mind" and was possessed by "some form of entity" after partying with his close friend Liam Anderson in November 2018.

Flame pleaded not guilty by reason of mental impairment to the murder, and after the verdict was delivered, Liam Anderson's mother Lindy hugged the man who killed her son.

Flame repeatedly stomped on Anderson shortly after sunrise in November, with the prosecution contending that he was psychotic at the time due to his voluntary use of drugs. However, the defence said he was affected by mental illness in the form of schizophrenia.

Outside court, Flame’s lawyer Leonie Gittani said her client was “very much” touched by the hug from his dead friend’s mother.

“It’s been a tough journey for him and a tough journey for everyone,” she said.

Ms Anderson also said outside court that "no one's winning out of this" and that she had forgiven Flame.

When he was arrested, Flame ranted to officers about Satan. The court was also shown a video of Flame sitting in a cell hours after Liam's death, calmly explaining what happened that night.

"No-one's going to believe me ... it was so real," he told an officer.

"He became a demon and apparently he was really angry with me ... and it wanted me dead.

"It was real f***ing dark shit."

Flame didn't realise he killed his friend, but did ask "is someone dead because of me?"

He will face a sentencing hearing before Justice Richard Button on December 8th.

Photo credits: 7News