Glenn Weggery found the bashed and bloodied bodies of his sister and niece in their Palmerston North home 15 years ago.
Yesterday he had to fend off the suggestion he killed them.
Mr Weggery found the bodies of Christine, 38, and Amber Lundy after entering their home on the morning of 30 August 2000.
His brother-in-law, Mark Lundy, 56, is accused of murdering them - Mrs Lundy for her life insurance and seven-year-old Amber because she caught him killing her mother, the Crown claims.
Key points of day two of the trial
About 140 witnesses are expected to give evidence during the eight to 10 week trial before Justice Simon France in the High Court at Wellington, and Mr Weggery was the first to give evidence.
He told of being "very close" to his sister and niece, and of the state he found them in after going into the house through an open door.
"I saw Amber lying facedown at the far end of the hallway."
He immediately reached for the phone to call emergency services but did not approach her body until they gave the okay.
"Her head was cracked open at the back. I knelt beside her, picked up her left wrist and felt for a pulse," Mr Weggery said.
Looking into the bedroom, "I saw Christine on the bed".
Defence counsel David Hislop, QC, questioned why Mr Weggery did not go to Amber as soon as he saw her, rather than calling emergency services first and why, during that call to emergency services he said she had "gaping head injuries" despite not having gone to her.
"On your account, you wouldn't know if she had gaping head injuries or not because you hadn't been up to the body," Mr Hislop said.
"I suggest you knew she had gaping head injuries because you were the one who hit her on the head."
Mr Hislop said Mrs Lundy appeared to have tried to fend off her attacker, and asked Mr Weggery whether it was him she tried to fend off.
"No she did not, because I never went in the bedroom, and I'm not going to sit here and be accused of it," Mr Weggery said.
Mr Hislop then suggested Mrs Lundy had "found out you'd been doing something you shouldn't have been doing" before going on to question the nature of his relationship with Amber, why he never babysat her and asking about allegations Mr Weggery had abused a young relative some years earlier.
Mr Weggery, 45, denied all the allegations - angrily, many times - and the Crown later revealed the young relative was about 10 at the time and Mr Weggery two or three years older.
However, Mr Hislop also revealed yesterday Luminol tests showed blood in the boot of his car and his bathroom, the latter which DNA testing matched 83 percent to Christine and 88 percent to Amber.
Mr Weggery said he "wouldn't know" where the blood in the car came from and that he knew "nothing about that" regarding the bathroom spots.
Karen Keenan was one of several Lundy family friends to give evidence yesterday, all of whom said the couple appeared happy.
Mrs Keenan told of arriving at the house for a regular walk on 30 August to be greeted by Mr Weggery telling her Mrs Lundy and Amber had been murdered.
She went inside to the start of the hallway and could see Amber lying in the doorway of her parents' room.
"All the back of her head was very matted and bloody. There was a huge pool of blood in the crook of her arm," she said.
"There was blood all round the walls and the roof."
Mr Lundy rang while Mrs Keenan was still in the house and she answered.
The police officer there with them told her to say they would call him back, so she told him Mrs Lundy was "a bit tied up" and would call him back.
Mr Lundy said he was in Lower Hutt and available on his mobile phone. He did not ask why she was answering instead of his wife, Mrs Keenan said.
Mrs Keenan said she and Mrs Lundy walked together several times a week but said her friend was a private person.
However, she had revealed in April 2000 the Lundys were paying $600 a day interest on a winery venture they were involved with.
Mrs Keenan asked her how she slept at night, to which Mrs Lundy said: "It was all right, that Mark was sorting it out with investors."
Other witnesses yesterday included to St John Ambulance officers and two police officers, all of whom attended the scene but admitted to not wearing any gear to protect the scene, such as covers on their shoes.
Witness Julie Burnett, who knew the Lundys through the Manawatu Wine Club, told of their credit card being declined for wine orders of several hundred dollars "more than once" in the months leading up to 30 August.
The trial continues.
* Clarification - For the avoidance of doubt, please note that Radio New Zealand reporter Sharon Lundy is no relation to Mark Lundy.