A Brisbane court has dropped charges against a French national accused of killing two British backpackers at a north Queensland hostel after he was ruled of “unsound mind” during the stabbing attacks.

Smail Ayad, 30, was charged with 16 offences, including the murder of 21-year-old Mia Ayliffe-Chung and 30-year-old Tom Jackson in the town of Home Hill, south of Townsville, in August 2016.

The Mental Health Court heard from a number of psychiatrists who all believed Mr Ayad was suffering from paranoid schizophrenia.

He has been remanded to a mental health facility in south-east Queensland.

The court was told Mr Ayad went on a stabbing frenzy during the “psychotic episode”.

Mia Ayliffe-Chung, 21, died in the August 2016 incident. Photo: AAP

It is alleged the attack began when he repeatedly stabbed Ms Ayliffe-Chung in her bedroom before stabbing the hostel’s manager in the leg when he tried to intervene.

He then jumped through a window, suffering a fractured neck and back, before stabbing a dog he encountered in the car park.

The court was told Mr Ayad then re-entered the hostel to return to the room where he had stabbed Ms Ayliffe-Chung and repeatedly stabbed Mr Jackson, who was also trying to assist.

Mr Jackson died in hospital several days later.

‘I lie awake thinking about my daughter’s last moments’

Thomas Jackson, 30, died to his injuries almost a week after he was stabbed in the incident. Photo: Facebook

Ms Ayliffe-Chung’s mother Rosie Ayliffe cried as she read her victim impact statement to the court.

“The tributes came from all over the world about how kind Mia was, how tolerant of others and full of love for everybody she met,” she said.

“No one was too good for her and no one too poor.

“Many, many nights I lie awake thinking about my daughter’s last moments and how it must have felt to her to lie dying.

“Did she feel pain? Did she know she was going? The images haunt me.

“I want everyone to understand though that this man’s acts of violence has robbed my world of my beloved daughter, a young girl who had everything to live for.

“I am proud to have been her mother and I will hold her in my heart until I die.”

Psychiatrists told the court Mr Ayad was suffering psychosis over a number of days prior to the incident, believing farmers were plotting to kill him.

They gave evidence, saying the accused had been using marijuana almost every day since he was 12 years old and was suffering from schizophrenia.

Other backpackers provided statements to police saying he had been acting strangely and sending “nonsensical text messages” prior to the attack, despite previously being “polite” and “good-mannered”.

-ABC