Hanny Papanicolaou plans to argue she had a substantive impairment of mind when she entered Marjorie Welsh's home in January 2019 and attacked her client of one year, the NSW Supreme Court heard on Friday.

"Not guilty of murder but guilty of manslaughter," the 37-year-old Roselands woman said when asked how she pleaded.

The Crown declined to accept the manslaughter plea and told the court the substantial impairment defence would be challenged.

The history upon which Papanicolaou's mental health reports have been based are in dispute, the court was told, leading the Crown to seek to call a number of witnesses about the veracity of the events leading to January 2.

Emergency services were called to Ms Welsh's home on the morning of January 2 after her personal panic alarm was activated. They found her with stab wounds, a punctured lung and multiple fractures.

Pieces of blue pottery were embedded to the rear of her scalp, a local court was told in 2019.

Before being placed in an induced coma and dying, she allegedly told police: "The cleaner did it."

Papanicolaou is due to face trial in May 2021.

Australian Associated Press