Colin Craig has described the shock he felt at being accused of sexual harassment by his former press secretary, Rachel MacGregor.
The former Conservative Party leader has begun giving evidence in the defamation trial against him in the High Court in Auckland.
He is being sued by the Taxpayers' Union co-founder Jordan Williams over comments he made in a widely distributed leaflet last year.
Mr Craig told the court today when he first learnt Ms MacGregor had laid a complaint of sexual harassment with the Human Rights Commission, it was like a bolt out of the blue.
"It was a huge shock to me, and very upsetting. I know that I had made a mistake in getting as close to Rachel as I had, but I never thought the affection between us was just one way.
"And the claim I had actually harassed her was something I found unbelievable."
Earlier today, Mr Craig said his conduct with his former press secretary went too far on some occasions.
He said that, as often happened when people worked together, he and Ms MacGregor's relationship became close and affectionate.
As a married man, their conduct was inappropriate at times, he said.
He regretted that and had apologised to his wife, Helen, who had forgiven him, he said.
Mr Craig's lawyer Stephen Mills told the court that his client's reputation was shredded by speculation about his relationship with Ms MacGregor.
Helen Craig is also expected to give evidence.
Lawyers for Mr Williams closed their case earlier this afternoon, and Mr Craig will continue giving evidence tomorrow.
- Jordan Williams - The plaintiff in the case and executive director of the Taxpayers' Union. He has accused Colin Craig of defaming him in a leaflet that was sent to 1.6 million households around the country in July 2015.
- Colin Craig - The defendant and former leader of the Conservative Party. He stepped down as leader in mid-2015 amid renewed speculation about his relationship with his former staffer, Rachel MacGregor.
- Rachel MacGregor - The woman at the centre of the allegations and Mr Craig's former press secretary. She alleges she was sexually harassed by Mr Craig over a long period of time. She quit her job two days before the 2014 election over a pay dispute.
- Peter McKnight - Mr Williams' lawyer.
- Stephen Mills - Mr Craig's lawyer. A defamation expert.
- Justice Katz - The High Court judge presiding over the trial.
- John Stringer - Former Conservative Party board member. Gave evidence that there was no smear campaign against Mr Craig. Also said Mr Craig had told board members there was nothing going on with Ms MacGregor.
- Christine Rankin - Former Conservative Party chief executive and candidate for Epsom in the 2014 election. Told the court she had thought Mr Craig was a moral man who could bring integrity into New Zealand politics.
- Megan Williams - Mr Williams' mother. Gave tearful evidence defending her son's reputation.
- Helen Craig - Mr Craig's wife. Expected to give evidence later in the trial for her husband.