Stuart Barry Russell, 40, of Franklin, has denied murdering Eggs and Bacon Bay man Brett Williams, with whom he was staying, in December last year.

Mr Russell's girlfriend, Bronte Dallas-Clarke, told the court that on the night Mr Williams died, he had argued briefly with Mr Russell.

She said while she and Mr Williams were cooking some fish caught earlier, Mr Williams picked a fight with Mr Russell who was fending off punches.

She said Mr William was down on the floor when she noticed a knife in Mr Russell's hand.

``I think I just said, `Why do you have a knife'?'' Ms Dallas-Clarke said.

``I think he dropped it in answer.''

She said Mr Williams was snoring when they left him lying on the floor.

Ms Dallas-Clarke said she, Mr Russell and their friend Chris Smith who was also present, left and returned to the house nearby where they had lived before moving into a caravan on Mr Williams's property.

She said they drank some wine and returned a few hours later to Mr Williams's house where they discovered he had died.

``Stuart went up to check on him and at first we thought he was still all right because we were hoping he was still all right,'' she said.

``We didn't really know what to do . . . we lit some incense for him and . . . we sat there talking with him.''