Friends and family of Nathan Day have burst into tears as a witness told the court how Phillip Dunn allegedly confessed to the murder of the Wangaratta man.
Speaking at the third day of a committal hearing at Wangaratta Magistrates Court on Wednesday, Mr Day's friend Raymond Bodsworth described a conversation he had with Dunn while they were drinking at another Wangaratta house.
He said Dunn allegedly told him "I know where Nathan went missing ... because I seen him take his last breath".
"He told me how they did it, as in Darcy McNamara and Phillip Dunn," Mr Bodsworth said.
"He said he done it at Darcy's place."
He did not believe Dunn at first, until he had heard Mr Day actually had gone missing.
"(Dunn) said he hit him with a hammer and had choked him," Mr Bodsworth said.
"If I remember correctly, he said it was over drugs and money."
He admitted he was "half drunk" during the conversation with Dunn.
Sitting in the dock of the courtroom, Dunn put his head down and started talking to himself as Mr Bodsworth said he gave a statement to police after he was contacted by police detectives.
Other witnesses told the court about conversations with Dunn, where he said Mr Day and McNamara were boyfriends who had been in a "lovers' quarrel".
Both Dunn, 59, and McNamara, 43, have been charged with Mr Day's murder, but are yet to enter any pleas.
The body of 34-year-old Wangaratta man Mr Day was found buried in McNamara's Ryan Avenue backyard on September 5, 2018, six weeks after he went missing.
He died after his throat was cut, possibly with a knife.
Loaves and Fishes - Christians Caring chaplain Rosemary Massey said Dunn attended the organisation as a client, where he was given food as emergency relief at one point.
She said he then attended Sunday services at the Salvation Army church every week for about 10 months.
Mrs Massey said her role was "to be a friend" to Dunn and listen to his concerns.
Dunn's defence barrister Diana Price said there could be privilege issues with Mrs Massey giving evidence about the details of her conversations with the accused.
"I'm not going to ask you about the actual content of the discussions you had with Mr Dunn," she said.
Magistrate Michelle Mykytowycz acknowledged that "it has been a difficult day for the family" of Mr Day who listened to the evidence in court.
The trial continues on Thursday.