John Walker, 46, blamed his illness and its tragic consequences on the trauma of an accident on the Grand Union Canal near Croxley Green, Hertfordshire.
In the accident his cabin cruiser Odin capsized in the wash from a powerful ocean- going speedboat, the Miami Vice.
In a settlement which came after a three-day contested hearing, Mr Walker, of Bovingdon, Hertfordshire, was awarded the damages against George Dixon, the Miami Vice's part-owner, and Stuart MacAndrew, a passenger aboard the cruiser, who jumped on to the speedboat as it drew alongside.
Patrick Bennett QC, the deputy High Court judge, was told that the award - for mental injury and loss, would be met by Mr Dixon's marine insurers.
The court heard that Mr Walker, who had a history of depressive illness, was traumatised through spending a long time in the water ensuring his 15 passengers, including a child, were rescued after his boat turned over in August 1987.
Twelve days later, in a psychotic state, he killed his father with a pick-axe handle for no reason. In January 1988, Mr Walker pleaded guilty to manslaughter through diminished responsibility and was put on probation on condition that he received hospital treatment.