A father picking up his teenage daughter from school in Sydney's west had a lucky escape when a gunman's weapon jammed mid-attack.

Police were called shortly before 3pm on Tuesday after a man pointed a handgun at a 44-year-old sitting in a ute in a school driveway in Fairfield. The man's 15-year-old daughter was already in the vehicle. Both got out and ran.

Neither was hurt, but police said they were "distressed." Officers are investigating whether the gun jammed — which may have saved their lives.

"The only description provided of the man with the gun was that he was dressed in black, wearing a black balaclava," the police statement read.

CCTV footage shows the pair fleeing down the quiet street, the father with his arm around his daughter, and the girl urging him to be careful.

Police are still trying to identify the gunman, but they believe the target was chosen simply because he's related to organised crime figures. There's no suggestion the father is himself involved in organised crime.

The incident comes amid an escalating gang war in Sydney's west. Earlier on Tuesday, police arrested two people after a funeral venue was shot up in Punchbowl. The venue was set to host the family of Lorenzo Lemalu — a Coconut Cartel gang leader shot dead in Vietnam.

Footage showed a gunman firing almost 30 bullets from a military-style assault rifle, believed to be a modified SKS, into the empty venue.

Police arrested a 17-year-old boy, who can't be named due to his age, and a 23-year-old named Ronald Donovan. Officers seized an "assault rifle magazine" during the arrests, though police made no mention of recovering the weapon itself.

The two were charged with firing the weapon and participating in organised crime activity. Donovan was refused bail and will remain in custody until August.

The Coconut Cartel and its former allies, the Alameddine crime family, have been locked in a long-running feud in Sydney's west and abroad. Lemalu's assassination may have been ordered by a third gang following the cartel's failure to keep a 400-kilogram methamphetamine importation from the hands of police.

Last year, police thwarted an alleged plot to execute a Sydney man outside his children's daycare centre.

Police are appealing for anyone who witnessed the Fairfield incident, or who has relevant information or dashcam vision from the area around that time, to call Fairfield Police or Crime Stoppers on 1800 333 000.