One of the men accused of killing Wangaratta's Nathan Day arrived at a friend's home late one night, allegedly holding a paint scraper and with blood smeared on his hand and pants.
David Gottchling, a former friend of Phillip Dunn, gave evidence on Monday on the fifth day of a committal hearing at Wangaratta Magistrates Court.
Dunn, 59, and Darcy McNamara, 43, each face a charge of murdering Mr Day, 34, in July last year.
Mr Gottchling said Dunn, his friend of 20 years, came to his home at 3am one morning and described an incident he interpreted as an admission that he and McNamara killed Mr Day.
"He had a paint scraper in his hands, blood all over his hands, smeared on him," he said.
Police seized the paint scraper, which had been hidden under the couch, after Mr Gottchling reported what he said happened that night.
"They were doing something, then Darcy took it too far," he said.
"Phil was proud of what he had done. He was big-noting himself, almost like it was a sexual experience - bragging about it."
He said Dunn also threw his shoes in the recycle bin because drops of blood were on them, but the bins were then collected.
Mr Day died on or about July 26 last year after his throat was cut, and his body was found on September 5 buried in McNamara's backyard in Wangaratta.
Dunn and McNamara are yet to enter any pleas.
The family of Mr Day shed tears in court as Mr Gottchling detailed how Dunn allegedly told him about the sounds his victim made when hit with a hammer.
"He was laughing about it when he told me he sounded like a sick cat," he said.
"There's no doubt they murdered him and it would have been a coward act."
Mr Gottchling told the court he was sure Dunn was talking about Mr Day, but under cross-examination from Dunn's barrister Diana Price, said he only put it all together when he found out Mr Day had gone missing.
"Phil, when he was with you, didn't mention Nathan's name at all, did he? ... He didn't mention anyone being killed," Ms Price said.
"No," Mr Gottchling replied.
He said he heard Dunn had been at Wangaratta RSL that same day, threatening an elderly woman with a paint scraper.
Asked by McNamara's barrister Jarrod Williams if he considered Dunn a friend, Mr Gottchling said "he used to be, but he's not now".
"I thought I knew him well ... but I didn't think he was capable of murder," he said.
He said he was fearful he would be the next victim.
Mr Gottchling made a statement to police on September 4, including that Dunn had claimed to have buried Mr Day's body.
Police located the body buried at McNamara's property in Ryan Avenue the next day.
Dunn's friend Bradley Chalk also gave evidence in court on Monday, saying Dunn was "fairly honest and a straight shooter".
He said he was drinking with Dunn, McNamara and another friend when Dunn told them about stomping on Mr Day's shins and watching him take his last breath.
After police started to speak to people about Mr Day's disappearance, Mr Chalk said he heard McNamara say "you're going to give me up" to Dunn, then walk away.
The committal hearing is expected to conclude on Tuesday.