Former Conservative Party press secretary Rachel MacGregor was allegedly sent a series of steamy text messages by her then boss, party leader Colin Craig.

Former Conservative Party leader Colin Craig wrote to his former press secretary telling her he wanted to kiss and hug her, and thanked her for dressing "modestly" after he was distracted by her low cut top, a court has heard.

Earlier the High Court at Auckland heard Craig allegedly sent a steamy text message to his then-press secretary Rachel MacGregor, saying he was dreaming of lying between her naked legs.

The text is amongst evidence being heard in a defamation trial in the High Court at Auckland.

Taxpayers Union founder Jordan Williams has taken a defamation case against Craig over a leaflet Craig is alleged to have spent nearly $300,000 to distribute to the media and millions of homes in 2015.

Craig is also accused of holding a press conference to accuse Williams of being a liar.

The case is being heard in front of a jury.

IAIN MCGREGOR Former Conservative Party leader Colin Craig is at the High Court at Auckland to fight defamation claims.

THE LETTERS

Partial letters allegedly written by Craig to MacGregor were read aloud to the court on Tuesday afternoon, some of which Craig told her he was writing in the middle of the night.

They spoke of him wanting to kiss her, asking if it were okay to hug her, and thanking her for heeding his advice about dressing "modestly" after an incident which Craig allegedly referred to in the letter as the "low-cut top incident".

"I was asked many questions about you the other day, which I will come back to, but one was whether we had a "special" relationship. I believe we do," Craig is said to have written.

"The other day I got asked some questions. I have great people that keep tabs on me. The questions were, 'Colin, are you having an affair?' and 'Do you think your relationship with your PA is special?' 'Have you kissed her?'

"It is great to have people that ask the straight questions. Well obviously the answer to the first (question) is no, unless I missed something :)"

CAMERON BURNELL/FAIRFAX NZ NZ Taxpayers Union executive director Jordan Williams has taken former Conservative Party leader Colin Craig to court over defamation claims.

To the second question, he wrote that he had answered yes, "I do think we work amazingly well. I think we are in tune with each other," Craig was said to have written.

"But it is more than just working well together. I have to say I honestly enjoy spending time with you."

In answer to the final question he had been asked about whether he had kissed MacGregor, Craig allegedly wrote: "Obviously the answer to the last question is no. Not that I wouldn't want to, a lot, but that is a boundary.

"The final thought on this is that I have never even given you a hug. I regret that...I would like to, if that was okay with you. One to discuss?"

Later he is alleged to have written, "While I'm on the subject...I do owe you an apology. You will recall the low cut top incident, and let's just delineate for a minute, to thank you for dressing modestly since then.

"I usually have very good control of what I look at, but I was caught off guard at the time. But there are no excuses. My eyes went where they should not have gone."

DETAILS OF ALLEGED SEXUAL HARASSMENT

Entitled Dirty Politics and Hidden Agendas, the leaflet contained Craig's claims that he had been strategically removed from the Conservative Party as leader and alleges Williams was party to what was described in court as a "malicious" campaign against Craig.

At the trial's beginning on Tuesday, Williams' lawyer Peter McKnight said the case would centre around a sexual harassment case Craig's former press secretary Rachel MacGregor took to the Human Rights Commission in 2014.

The case was settled privately with both parties signing confidentiality agreements.

Craig has denied sexual harassment allegations and the specific details of the allegations have never been aired publicly - until now.

On Tuesday Williams began describing what MacGregor had detailed to him about the alleged harassment.

He was left feeling "disturbed," he said.

Weeks after MacGregor's abrupt resignation as Craig's press secretary in 2014 Williams said he got in contact with her to ask if he should still vote for the Conservative Party.

He later went to her house where a teary MacGregor told him that Craig had sent her inappropriate letters and text messages, and that when she failed to return his advances he stopped paying her.

MacGregor sought Williams' advice because he was a former lawyer and she wondered if she should tell Conservative Party board members in an effort to try and recoup her salary, Williams told the court on Tuesday.

"I immediately appreciated the seriousness of Rachel's allegations," Williams said.

"The letters confirmed much of what Rachel had told me. Even if she was lying or exaggerating, the letters alone suggested that Mr Craig was clearly besotted with Rachel."

MacGregor outlined to him alleged harassment including Craig walking into her hotel rooms unannounced, or refusing to leave.

On the 2011 election night he allegedly tried to kiss her and touch her inappropriately, and would frequently change in front of her.

MacGregor told Williams that Craig invented excuses for her to stay late at work, or would prevent her from leaving political events in the evenings.

MacGregor told Williams the alleged harassment continued right up until she resigned.

"Having heard from Rachel the allegations, having read the letters she showed me, and having seen or been read a series of text messages, I felt sick to my stomach about Mr Craig's actions and my support for him," Williams told the court.

He alleged that MacGregor had told him that Craig owed her six months' worth of pay, and that rather than addressing the dispute between them about what she was owed, Craig allegedly "loaned" MacGregor money instead.

When she took the harassment claim to the tribunal, Craig was said to have ordered she repay him at an interest rate of 29 per cent, Williams said.

Jurors will be given a copy of Craig and MacGregor's confidentiality agreement, copies of letters Craig allegedly sent to MacGregor, and other notes she is said to have kept in relation to the pair's communication.

A video of Craig speaking to media was also played to the jury, where Craig told reporters that he and his wife had "forgiven" a loan MacGregor allegedly asked for to pay off her credit card debts.

He said in "hindsight" their relationship was inappropriate.

"We have acknowledged that so we can both move on," he told reporters at a press conference.

Williams told the court he felt a duty to warn others of Craig's alleged harassment and first decided to approach former Conservative Party Napier candidate Garth McVicar, he said.

He later had a meeting with other Conservative Party board members, but did so without MacGregor's knowledge so that she wouldn't be in breach of the confidentiality agreement, he said.

On Tuesday afternoon, after the jury watched footage of Craig's press conference that gave rise to the defamation claim, Williams continued to refute the suggestion that he was part of a campaign against Craig.

During the conference Craig announced he would be taking civil proceedings against Williams, former Conservative Party board member John Stringer, and WhaleOil blogger Cameron Slater.

During the conference he said the three had run a "campaign of defamatory lies" against him.

That was was rejected by Williams, who told the court he was "alarmed" by Craig's announcement.

"I was not involved in any coordinated campaign to undermine Mr Craig," he said. "As far as I know, there was no coordinated attack.

"I'd never spoken to John Stringer. He wasn't even one of the board members who was calling me trying to elicit out information."

MACGREGOR 'OFFENDED AND DISTRESSED'

Earlier, Williams' lawyer Peter McKnight said MacGregor was then "offended and distressed" after Craig had an interview with former Newshub presenter David Farrier in a scene where Craig agreed to film the interview in a sauna.

"At the time Rachel MacGregor would not go into details but indicated that Colin Craig was a manipulative man," McKnight said.

"It will be suggested to you, time and time again by myself, that that is exactly the word that describes him. A person who will use his power and wealth to in effect, manipulate and control others.

"Colin Craig, rather than keeping to the agreed wording to which he was lawfully required to do, made certain comments about Rachel MacGregor that caused offence and distress to her."

MacGregor will give evidence on Thursday.

Also expected to give evidence is Dirty Politics author Nicky Hager and politician Christine Rankin.

Both Craig and his wife Helen Craig are present in court.

"There is really only one issue. Did Jordan Williams make up allegations about Colin Craig?" McKnight said in his opening address.

"This is a defamation case which relates to very public remarks that were made by Colin Craig in July 2015. He called a press conference and at that press conference made certain comments about Jordan Williams. It is these comments Jordan Williams says has damaged his reputation."

The jury trial in front of Justice Sarah Katz has been set down for five weeks.

It is unusual for civil issues to be determined by a jury, and the court was told it was the first time Auckland had a jury determine a civil issue since 2002.