Colin Craig's former press secretary Rachel MacGregor has described being told by her boss he imagined lying on her legs as a "sleep technique" to fall asleep.
Ms MacGregor resigned that day in September 2014 as she travelled in a car with Mr Craig to an interview, just before the election.
Ms MacGregor was giving evidence on Tuesday in the defamation case Taxpayers' Union executive director Jordan Williams is taking against Mr Craig.
She told the court that on September 18, 2014 she met with Mr Craig on Auckland's North Shore for an early morning radio interview, and after making small talk for a few minutes Mr Craig told her about imagining sleeping and lying on her legs.
Mr Craig became "almost like a child or a baby" to her, Ms MacGregor told the court.
He would ring her late at night and ask for her to keep talking until he went to sleep. Sometimes he would also beg her for "shoulder rubs" for a condition he has that tenses up his shoulders and creates a lot of pain.
It was "disgusting" she said, and "he used to smell really bad".
At first, she said she felt like she had to do it because he was her boss and she was worried there would be consequences if she didn't.
She later told him to stop as it made her feel uncomfortable.
"'Colin you cannot continue making those comments, we've been through this,'" she repeated for the court.
He claims she propositioned him, saying she wanted to be more than his press secretary, which she said was an "utter fabrication".
"The thought disgusts me."
When she first started working for him, she said she admired him and respected him.
"We were really good friends actually; we got on really well."
But by September 2014, she alleged she discovered he was "dodgy" and lacked integrity.
"He was a liar. He was dodgy, as in he wasn't trustworthy," she said.
After consultation with lawyers, a letter was drafted and sent to Mr Craig explaining his behaviour was extremely unwelcome.
Attached were copies of letters and a card Mr Craig had written to her, and which her lawyers believed were evidence against Mr Craig.
She said she had shown the attached letters to only a few people because they were "odd, upsetting and inappropriate".
"I wanted to show them to other people to see if my feelings were justified."
She also brought up the fact that he hadn't agreed to a higher pay rate for the election work she was doing. It meant she hadn't been paid for three-and-a-half months, as she wasn't going to invoice him until an agreement on the higher pay rate was reached.
Ms MacGregor threatened to resign if he refused to talk about her pay again, and when Mr Craig made it clear he still wouldn't talk about it she told him she was resigning and got out of the car.
"[They were] gross and embarrassing comments and refusing to deal with my pay, I had had enough."
She was picked up by her boyfriend, and later that morning told a journalist that Mr Craig was a "manipulative" man.
Mr Craig appeared taken aback when told of the news by journalists, saying he thought she was just taking the morning off.
Ms MacGregor said after she resigned, Christine Rankin had called her asking her not to resign and to come back.
But she didn't hang up the phone after the conversation and Ms Macgregor claims Ms Rankin could be heard in the background saying, "We're f**ked."
Mr Craig didn't admit anything inappropriate had occurred between himself and Ms MacGregor until June 2015. Ms MacGregor responded by accusing him of breaking a confidentiality agreement the pair had signed.
"If I had ever wanted to be the subject of public attention, I could have called one of my media contacts and offered an exclusive interview about Mr Craig and his behaviour towards me," she told the court.
She said she was "gutted" when Mr Craig breached the confidentiality agreement in a sauna interview on Newsworthy.
"We had agreed not to talk about each other, and I felt immediately if Mr Craig was going to say this, what else was he going to say?"
Ms MacGregor said she didn't discuss her sexual harassment claims with Mr Williams until after she had resigned, but she never gave Mr Williams permission to use the evidence against Mr Craig.
She wanted him to help her, and wanted advice on whether she should go to the Board of the Conservative Party to get the money back.
At the same time she and Mr Jordan started a romantic relationship, but she began to get suspicious that he had taken copies of the correspondence.
"I had not given him permission take the letters. I had not given him permission to talk to anyone else about my sexual harassment claim."
Ms MacGregor said she was infuriated when Mr Williams leaked a poem to blogger Cameron Slater, knowing it would be humiliating to Mr Craig.
It was one of the most serious breaches of the confidentiality she had with him, she said, but she also called it "courageous".
When pressed, she said she didn't think Mr Williams was running his own agenda by releasing the information.
"He thought in his mind that he was doing the right thing. Jordan's got this really noble side of him," she said.
"He really thought he was exposing a big hypocrisy and a big lie - tell the truth and stand up to this massive bully no one else has dared to."
Mr Williams claims Mr Craig defamed him with statements he made at a media conference in July 2015, where he revealed a booklet claiming Mr Williams was part of a "coordinated attack" on the ex-Conservative Party leader.