Former Conservative Party leader Colin Craig admits his affection towards his press secretary at times went "too far for a married man" but says claims of sexual harassment are "unbelievable".
Taxpayers' Union executive director Jordan Williams is suing Mr Craig, who he claims defamed him in a leaflet sent to 1.6 million homes, which he says accused him of spreading lies about the reasons behind the sudden resignation of Mr Craig's press secretary, Rachel MacGregor, days before the 2014 national election.
Mr Williams says he went to senior party officials out of concern for Ms MacGregor after she had confided in him about alleged sexual harassment by Mr Craig, including inappropriate touching, comments, and romantic letters and poems.
Taking the stand in the High Court at Auckland on Thursday, Mr Craig said while he viewed Ms MacGregor as a sister, "boundaries had been overstepped" in their relationship.
"I accept my affection for Rachel went too far for a married man," he said, adding his wife Helen had forgiven him since.
"The claim I had actually harassed her was something I found unbelievable."
Mr Craig said he felt trapped because he was unable to reply to the allegations when approached by senior party members, because it would breach a confidentially agreement he and Ms MacGregor had signed as part of a human rights case settlement.
He said in June, 2015 he began receiving anonymous texts threatening to make public information about him
"Resign to protect your family, Colin," one read, saying the author had seen the "sex texts".
Mr Craig said after Ms MacGregor resigned she stopped sending invoices, meaning he was unable to pay her for the last few months of work, although this was eventually settled along with a loan Ms MacGregor owed him.
Opening the case for Mr Craig, lawyer Stephen Mills said Mr Williams had kept leaking information to the media until Mr Craig's reputation was "shredded" and there was "no way back".
It had not helped Ms MacGregor, but served another purpose, he said.
Mr Craig's lawyer told the court Mr Craig won't deny that his statements in the news conference and his dirty politics leaflet lowered Mr Williams' reputation, but he will use the defences of truth, opinion and qualified privilege - that if he was attacked he could defend his reputation in the same way that if he was attacked physically he could use self-defence.