In his summing up today Judge Mahon said the fact Hili had admitted to drinking between eight and 12 drinks in a two-hour period at a nightclub in Glen Innes before the incident made his evidence and recollection of events unreliable.
Mr Watson said he saw Hili stagger out of the car and yelled out to him to stop Hili going inside his property.
He tried to engage the man in conversation as he waited for backup, but Hili was not in the mood to talk.
"He just kept saying 'I'm going to f***ing smash you'," the officer said.
"He kept repeating that mantra. It was quite odd."
Eventually the pair came together and Mr Watson said he sprayed the defendant with his pepper spray for about 20 seconds.
But as the effects wore off, he told the court the pair ended up on the concrete with Hili punching him in the back of the head as he attempted to radio for support.
The alleged blows were initially misdirected but Mr Watson said "about 10 connected really well" after the man had grabbed the back of his stab-proof vest.
The prosecution produced a photo of a cut to the back of the officer's head, which saw him hospitalised for several hours.
Mr Watson told Judge Mahon he had been on blood thinners at the time after suffering a stroke only a month earlier.
Hili denied all the charges, and said he didn't know Mr Watson was an officer, wasn't driving the car, and never punched him.
He will be sentenced next month.