In a judgement examining the extent to which doctors should detain people with a mental illness in order to protect the wider community, the High Court of Australia overturned a damages decision in favour of the family of Stephen Rose.

Mr Rose, 45, was strangled to death on July 21, 2004 just outside of Dubbo on the Newell Highway.

Phillip John Pettigrove, 41, was charged with his murder.

Pettigrove bashed, choked and then suffocated Mr Rose with a plastic bag before forcing it down his throat.

Police facts revealed Mr Pettigrove was released from a special care unit at Manning Hospital in Taree at 12pm that day.

Mr Rose had taken Mr Pettigrove to the hospital two days earlier where he was seen by a psychiatrist and diagnosed with chronic schizophrenia.

The two men were travelling by car between Taree, on the mid-north coast, and Cohuna in Victoria when they passed through Dubbo at about 8pm.

Shortly after, the pair stopped on the side of the Newell Highway 25 kilometres south of Dubbo, where Mr Pettigrove is believed to have gone for a toilet break.

Mr Pettigrove strangled Mr Rose on the side of the Newell Highway, later telling police that he was taking "revenge" for Mr Rose having murdered him in a past life.

Mr Pettigrove committed suicide in his jail cell three months later.

Mr Rose's mother and two sisters sued Hunter New England Health for negligence, claiming a psychiatrist's decision to release Mr Pettigrove into Mr Rose's care led to his death.

After losing in the NSW District Court, the Rose family successfully appealed the decision in NSW Court of Appeal and were awarded $252,000.

But, the Health Service appealed to the High Court which has now found the hospital staff did not owe Mr Rose's family a duty of care.