Former Conservative Party candidate Christine Rankin has told the court she knew in her heart there was something "very wrong" going on between Colin Craig and former press secretary Rachel MacGregor.
The evidence is part of a defamation case Taxpayers' Union executive director Jordan Williams is taking against Mr Craig for statements the former Conservative Party leader made about him.
Letters allegedly from Mr Craig confessing his love for Ms MacGregor are being used as evidence to prove Mr Williams did not fabricate the details of Mr Craig's alleged sexual harassment.
Colin Craig (Newshub.)
Ms Rankin says "there were many, many things" that led her to be suspicious.
"It was the kind of behaviour people display all the time when they're having an affair. Curtains were erected in whatever office they were in. The atmosphere - you could almost touch it. They disappeared for very long amounts of time."
She said despite seeing numerous signals, Mr Craig would repeatedly tell her nothing was going on.
She says Mr Craig told her Rachel MacGregor had a mental illness, something he and his wife were helping her work through.
Ms Rankin then went on to meet with Mr Williams, who'd showed her the communications purporting to be from Mr Craig to Ms MacGregor.
But it was the text that read: "I slept well because I dreamt of being between your naked legs" which caused her to lose all confidence in Mr Craig.
"That text was the icing on the cake," she told the court.
Ms MacGregor took a sexual harassment case against Mr Craig to the Human Rights Commission in 2014 and resigned in September of that year, just before the general election.
Rachel MacGregor (Supplied)
It was during a press conference in 2015 Mr Craig named Mr Williams as being part of a coordinated attack to bring him down.
During this same press conference, Mr Craig also disputed sending sexually explicit texts or paying Ms MacGregor hush money.
However Mr Craig said it was Ms MacGregor who had made the indecent proposal. He also went on to tell Ms Rankin about how he chose his wife over the press secretary and that he was proud of that decision.
After reading the messages, Ms Rankin went on to confront Mr Craig following the election campaign.
"Like Jordan, I was 100% behind Colin. But I now see that I was wrong to be."
"I believe what Jordan did was right. He told the truth, he stood up for someone that was being bullied majorly and he did the right thing."
Mr Craig resigned as Conservative Party leader in June 2015 and at that time said he had a "positive and constructive" working relationship with Ms MacGregor, but admitted "some of our misconduct was inappropriate".
He denied sexually harassing anyone.
In court on Tuesday Mr Williams revealed the explicit text messages allegedly sent by Mr Craig to Ms MacGregor.
One read: "You are wonderful, (you know what I mean by that) ;)"
Both Colin Craig's wife Helen Craig and Ms MacGregor are expected to give evidence at the trial, which could last up to five weeks.