He is now facing allegations he murdered Mr Day, alongside co-accused Phillip Dunn, in July 2018.

The accused pair are yet to enter any pleas in court.

The body of 34-year-old Wangaratta man Mr Day was found buried in a Ryan Avenue backyard on September 5, six weeks after he went missing.

He died after his throat was cut, possibly with a knife.

Details of the friendship between the accused and the alleged victim were examined on the second day of a committal hearing in Wangaratta Magistrates Court on Tuesday.

Daniel Field was a friend of both McNamara, 43, and Mr Day, 34, and told the court that "one minute they're friends, the next they're not".

He described the incident where McNamara called him and said he was going to kill Mr Day.

When Mr Field went to his house, he found Mr Day lying on the front lawn, bleeding a little from the head, and McNamara standing at the front door.

"He got up and Darcy came back and hit him again," Mr Field said.

He said Mr Day got up a second time after being punched, took a drink from the cask of wine that was in his backpack and rode away on his bicycle - saying he was going to report the matter to police.

On another occasion, Mr Field heard a drunk McNamara say he was going to cut up Mr Day and dump him in the creek after the pair had a fight.

On July 26 last year, the day police allege Mr Day could have been killed, a drunk McNamara demanded Mr Field loan him a jerrycan.

Mr Field said he refused, so an aggressive McNamara threatened to kill him, punched the front door and kicked his letterbox - but they made up later and talked.

"I asked him why he needed a jerrycan for, he said to burn down Phil Dunn's house," he said.

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Wangaratta resident Christine Stevens also gave evidence that she saw McNamara and Mr Day in a fist fight in the middle of an intersection on a night in July or early August, which was over accusations that Mr Day stole a television.

"Darcy said 'I've got a knife, I'm going to stab you' and Nathan said 'you don't have the guts'," she said.

"I didn't actually think it was too serious until he went missing."

She recognised Mr Day from the photographs in the media when he was reported missing and contacted Crime Stoppers.

Mr Day's former housemate Ian Norwood also heard McNamara threaten to kill both Dunn and Mr Day.

"I thought he was drunk and carrying on," Mr Norwood said.

"Obviously he took it very seriously."

It was Elizabeth Torny who first reported 34-year-old Nathan Day missing last year.

They had met through the church and he had stayed in the lounge of her Wangaratta home regularly over the previous couple of years.

"It makes me feel good to help people," she said.

"Nathan was a wonderful boy and he had a lovely heart."

Ms Torny told the court the last time she saw Mr Day, he was planning to confront Phillip Dunn, 59, about pulling out plants in her garden.

Other neighbours told Tuesday's hearing that Dunn regularly caused trouble in the street by abusing people.

Christine Stevens lived near him for three years, describing him as a "crazy" man who was drunk most days.

"He was a menace in my neighbourhood the entire time," she said.

"He would walk past and abuse me regularly, and say horrible things about my children."

She said Dunn threatened to rape her and her children.

Dunn's defence barrister Diana Price put it to Ms Stevens that the rape threats never happened, but she disagreed.

Ms Stevens said Dunn would often abuse anyone he saw in the street, including elderly ladies.

"I would see him creeping around all the time," she said.

Other accusations were that Dunn would tip rubbish into the yard of his elderly neighbour and smash glass bottles onto the road at night.

The trial continues on Wednesday.