"I employed her as a personal assistant ... She came down to Australia to meet my family, she babysat my grandkids etcetera."
They agreed to meet in Honolulu while a rugby team Sir Owen sponsored played there, and the incident unfolded after a team dinner.
"At roughly midnight I said 'look, I'm tired, I've had enough'. I went back to the hotel and she said 'oh, I am also tired'.
"On the way to the hotel she said 'I need to go up to a pharmacist and get some headache pills' and so she got out of the car, I just went back to the hotel and went to bed."
Two Hawaiian policemen knocking on his door at 1.30am said the woman had filed an assault complaint against him and took him into custody. He was released on bail the next day. The woman dropped her claims, and the case never went before a judge, he said.
"There was subsequently no case to answer. If both parties agree there is no case to answer, it's no contest," he said.
However, he said she then filed a lawsuit against him for unfair dismissal.
"She was a case of extortion, I said I wouldn't pay her out. But [the employment mediator] said 'look, have a small settlement, whatever I can get it down to' so I agreed to that in the end only because of the length of time and the harassment etcetera, but I only paid that strictly - and it's in the court papers - for payments of her psychiatric bills."
The settlement was $80,000 as opposed to the $300,000 she was seeking.
Sir Owen has been criticised for not disclosing the incident to those involved in the inquiry.
"Nothing happened, I didn't see the need [to tell the inquiry]. Why would I tell them about something that never happened? I got a parking ticket, want me to tell you about that?"
The Hawaiian incident, supposedly settled nearly a decade ago, resurfaced in recent weeks because the woman wanted to be paid to say it wasn't true, said Sir Owen.
"I don't think I have done anything wrong. I haven't broken any commandments, I am a good Catholic boy ... I have done nothing wrong, why should I hide? If there is no evidence and there was no event what do you want me to do? Go around and sue them all? No. Should I pay her another $100,000 to get it refuted? Would that make everyone happy? Nope."
Trouble within the inquiry started in May when founding director Ruth Herbert quit over concerns about ensuring the safety of survivors of violence who were willing to tell their stories. Five experts quit soon after, followed by 10 last week.
Sir Owen said last night he would continue the inquiry. He said 250 victims of family violence had contributed to it, and 600 more were waiting to be heard.
"People who can't defend themselves, women and children, that's what gets to me. That's what I am doing, giving them a reason to hope, doing something about it and following through until it's done. I'm very stubborn."
He said he planned to poll the New Zealand public, and base his next move on the result.
