The victim, 52, known as "Male D", was attacked at his home in Melbourne's south-east by his friend, known as Y, on January 25, 2009, after they had been out drinking.

Y rang triple 0 at 11.26pm to say Male D had drowned in the pool.

Y told the operator: "He deserved it, he's a mother f--ker, he's a dog."

Y later claimed to have tried to revive Male D because they were "brothers in arms" and he loved him. Male D died in hospital on February 2.

Y later pleaded guilty to manslaughter and was jailed for eight years with a minimum of six years.

Coroner John Olle decided to hold an inquest into Male D's death to investigate how staff had managed Y from when he was an involuntary patient at the Casey mental health service unit from December 30, 2008 to January 16, 2009, before being discharged.

In his recent finding obtained by Fairfax Media, Mr Olle said a consultant psychiatrist who dealt with Y on each of his four admissions to the Casey unit since 2006 reported that Y suffered from a schizo-affective disorder with manic and depressive episodes as well as psychotic symptoms.

The coroner said Y was back at the Casey unit on December 6, 2008, reporting paranoid thoughts and hearing voices and asking to resume his anti-psychotic medication.

He was discharged six days later but re-admitted on December 30, 2008, following a long siege at his parents' home after they had raised concerns over his deteriorating mental state and aggression.

Y had taken his parents hostage when a crisis assessment and treatment (CAT) team arrived but the siege ended when Special Operations Group officers were called in.

The coroner said Y, who was taken back to Casey, then met with his parents on January 8, 2009, who told staff they had "reached the end of their tether"' and did not want him staying at their granny flat.

Mr Olle said Y seemed to settle down between January 9 to 16 and did not require close monitoring or being placed in the acute medical area or in seclusion.

"He continued to be angry when his needs were not immediately met but this behaviour was managed by nurses using firm boundaries," the coroner said.

The consultant psychiatrist then decided that Y was not psychotic or manic and could be discharged.

The psychiatrist felt he could distinguish between Y's paranoid behaviour and his normal belligerent, caustic manner.

Y's anti-psychotic medication was stopped on his release because the consultant psychiatrist did not want him to be over-sedated when living back in the community.

Y attacked Male D nine days after he was discharged.

Psychiatrist Professor Paul Mullen, who provided an independent expert opinion on Y's discharge, said the assessment of Y's risk of becoming violent had been poor.

"It was, however, no worse than that which occurs in most acute psychiatric units in Victoria," Professor Mullen told the inquest. "Those with the knowledge and skills to carry out such assessments adequately are thinly spread in the public mental health services."

In his finding, the coroner said Male D had died at Dandenong Hospital on February 2, 2009, from multiple injuries and immersion, leading to hypoxic brain injury and pneumonia.

Mr Olle said that in hindsight poor clinical decisions were made in respect to Y but the staff's management of him was not unreasonable given the context of the conditions in which they worked.

He recommended clinical staff in acute psychiatric settings be able to transfer a patient to a recovery/step down unit to help treat their illness before their discharge; and consideration be given to creating a forensic psychiatric specialist service along the lines of the former Forensicare Community Integration Program.