'Lines had been crossed' - Helen Craig talks of life with Colin Craig and Rachel MacGregor

Colin Craig's wife says her husband's "emotional affair" with his former press secretary crossed lines but there was never any sexual harassment.

"My full name is Helen Ruth Craig," the High Court at Auckland heard this afternoon.

She had been asked by her husband of 27 years to confirm her identity before she began testifying about her now overt and dissected life with the former Conservative Party leader and Rachel MacGregor.

"It has been and continues to be a wonderful marriage," she said.

"My husband has not made many mistakes in his life. So when he does it always catches me by surprise."

Her husband is suing MacGregor for defamation and she is suing him in return.

It is another chapter in the lengthy saga of defamation court proceedings following New Zealand's 2014 general election which began the unceremonious end to Colin Craig's political career.

The Craigs began with little material wealth, according to Helen Craig, but they soon developed their accountancy and property management businesses.

"Some said they could not work with their spouse everyday but we have enjoyed the experience and have had some business success," she said.

Rachel MacGregor is expected to give evidence at the end of the week. Photo / Brett Phibbs

Following the introduction of the controversial anti-smacking law in 2009, Colin Craig decided to enter politics - believing New Zealand's conservative citizens were being ignored and feeling his parental strings being pulled.

He soon became leader of the Conservative Party and MacGregor was hired as his press secretary in 2011.

The Craigs' friendship with MacGregor quickly developed.

They shared Christmas with the former TVNZ journalist and celebrated her 30th birthday with just her parents and boyfriend of the time.

"By 2012 it was obvious to me that Colin and Rachel were close and working closely together," Helen Craig said.

As a result she penned a letter "outlining the rules of their relationship".

MacGregor, later giving evidence in her own defence, said: "I began to consider him a friend and someone I could trust."

But, she said, the relationship became uneasy when Colin Craig began writing her his "inappropriate" poems and requesting more back rubs.

Warned of the "lure of infidelity", MacGregor said Colin Craig was also sending her messages, including biblical scripture from the books of Proverbs and Corinthians.

Often Colin Craig's messages ended with "YAWAB".

In full it meant "you are wonderful and beautiful", the court heard.

"It's quite nice being told all these nice things about you," MacGregor said.

However, prior to the 2014 general election Helen Craig said she became concerned MacGregor was overwhelmed with work.

In June that year, her husband came home and said MacGregor was not coping, she told the court.

Colin Craig would later tell his spouse he thought MacGregor "appeared to be having a meltdown".

A smiling Colin Craig arrives at court towing his bags of evidence on the second day of the trial. Photo / Brett Phibbs

A couple of days before election night 2014, Helen Craig said MacGregor rang her and uttered "information was about to become public".

MacGregor would soon quit as press secretary.

"She admitted to me she had been having emotional affairs [with my husband]," Helen Craig said.

She would later also learn her husband had kissed and touched MacGregor's breasts on election night 2011.

MacGregor said she kissed her boss back but later added she never wanted to kiss him again.

"I was not physically attracted to him in any way," MacGregor said.

Helen Craig said: "I was not happy with Colin that he promised Rachel not to tell me about the election night incident.

"It was obvious to me that Colin and Rachel had become too close and lines had been crossed on occasions.

"I have always known that the relationship was mutual and did not involve sexual harassment."

She stood by her husband and has several times denied the allegations he sexually harassed MacGregor.

"I knew the truth. I had been involved directly in these events and I wanted to testify publicly that [Colin] was wrongly accused."

As she concluded her evidence she smiled towards presiding judge Justice Anne Hinton.

Colin Craig told his wife: "Thank you very much."

Helen Craig and her husband Colin Craig embrace at a press conference. Photo / Nick Reed

Colin Craig argues MacGregor defamed him three times.

Firstly by what MacGregor told New Zealand Taxpayers' Union founder Jordan Williams, then in a media release by MacGregor in June 2015, and also in a tweet on the same day.

A confidential settlement between him and MacGregor was reached in May 2015, but rumours quickly surfaced and were made public.

In 2016, Colin Craig was ordered to pay MacGregor more than $120,000 by the Human Rights Review Tribunal after it ruled he breached the confidentiality agreement in interviews with the press.

"I have never defamed him," MacGregor said.

"I told a small group of friends in confidence that I had been sexually harassed by Colin Craig ... I did not broadcast it."

MacGregor's lawyers, Linda Clark and Hayden Wilson, claim she was defamed in four instances.

Twice in two press conferences held by Colin Craig, in a booklet titled Dirty Politics and Hidden Agendas which was delivered to 1.6 million Kiwi households, and in a letter to Conservative Party members.

Wilson said Colin Craig defamed MacGregor by alleging she made false claims of sexual harassment.

Colin Craig also withdrew his claim for damages, after he became aware MacGregor could not pay him if he won the case following a newspaper story.

He has had defamation proceedings against what he calls the trio of "schemers" who plotted against him. They are Williams, Conservative Party board member John Stringer, and Cameron Slater.

Justice Kit Toogood is yet to release his decision on the Craig and Slater proceeding, while Craig's case with Williams is now before the Supreme Court.

The Craig and MacGregor trial, which is due to last two weeks, continues.

Colin Craig goes through one of his many bundles of evidence. Photo / Michael Craig