A man accused of bashing Lance John Murphy to death with a tree branch has told the court he believed the victim was a hit man who had murdered his own wife and was possessed by a demonic 10-headed dragon.

Michael Joseph Davies, 52, is standing trial accused of kidnapping Lance Murphy, a friend of 30 years, before beating him to death and leaving him tied to a tree at the top of a hill in Puhoi in November 2015.

Davies' co-accused, 38-year-old Steve Gunbie, is charged with helping in the kidnapping and with hiding the body.

Gunbie was arrested in Waihi back in December 2015.

On Tuesday, Davies, also known as Michael Waipouri, told the High Court at Auckland, he had grown ever more wary of Mr Murphy's unpredictable behaviour in the years and days leading up to his death.

He said Mr Murphy had boasted to him he was a hit man, who had killed among others, a work colleague at a steel factory.

"Lance told me he had thrown that man into the [factory's blast] furnace," he said.

Davies also increasingly came to believe Mr Murphy had given his long-time wife a lethal dose of medication when she was sick with cancer in 2015.

After trying numerous treatments for his wife's cancer, Davies said Mr Murphy began to repeatedly complain.

"She is costing too much to keep alive, she is starting to stink ... and she is cursing [me] with every foul curse in the book," Davies said.

He said he believed Mr Murphy had also, a short time later, withheld medication leading to the death of his wife's mother.

When Davies shared his accusations with a friend, he said Mr Murphy heard about it and sent stand over men to intimidate him.

He later came to Davies home in November 2015 and threatened to kill him, saying he would use him "as a boat anchor".

During the visit, Davies believed he had a spiritual moment in which he saw a 10-headed dragon leaving Mr Murphy's chest, with each head meant to represent a person he had killed.

Davies' testimony comes after an earlier witness in the trial said he had heard Mr Murphy was responsible for the cold case murder of Jane Furlong.

Davies' lawyer John Munro also told the jury while other people might interpret events differently, it was important to remember Davies genuinely believed Mr Murphy was a threat to him.

He said Davies had formed his beliefs based on Mr Murphy's behaviour, his own blend of spirituality and a deeply paranoid personality.

The trial continues.

Source: AAP.