Hayley West and husband Tobias Richardson were preparing for the funeral service of her brother-in-law Seth at a school building in the Blue Mountains west of Sydney on Thursday morning when the alleged carjacker made his move.



"Just as we were talking in the foyer and one of the funeral directors was getting the trolley to put the coffin on, a guy jumped out of the bushes and jumped into the hearse and started it up," West told ABC radio.



"The funeral home guy was banging on the window, saying 'What are you doing? You can't drive away in a hearse'.



"We are all standing around, going 'Oh my God, the hearse has been stolen'."



Richardson jumped into his own car to pursue the thief as West called police and an aghast crowd watched the chase unfold.



The hearse drove into the grounds of a school, with Richardson using his car to block it from being driven any further, West and New South Wales police said.



"Tobias jumped out and said, 'What the hell are you doing?'," West said. "The guy meekly said, 'I need to go to hospital.'"



NSW police officers arrived five minutes later to take the 49-year-old man away, adding that he had dementia and had gone missing from a nursing home earlier Thursday.



"The missing 49-year-old man was detained at the scene and taken to hospital for assessment," police said in a statement.



"It is anticipated that no further police action will be taken regarding the incident."



West said the funeral service carried on as planned after the hearse was returned, and that Seth Richardson would have seen the funny side of the incident.



"He would have thought it was hilarious."