James Bambrough, who liked to be known as Janis, was last seen alive at a party in Westport in October 1999. His body was found in a remote part of the West Coast in September after police reopened their inquiries.
Hayden Brent McKenzie, 27, of Westport, and Leighton Brian Wilding, 37, formerly of Nelson, have been charged with his murder.
Justices of the Peace Robin Leathey and Richard Williams yesterday began hearing depositions in the Greymouth District Court.
Police allege that McKenzie bragged two years ago that he had "killed a faggot".
In September, McKenzie led investigators to the body, but said Wilding had committed the murder and he had helped dispose of the body.
Bambrough disappeared after drinking heavily at a party hosted by McKenzie's mother, Patricia Lee, at her Westport home on October 13, 1999.
Lee and Bambrough were good friends.
Two days before, she got McKenzie and his friend, Wilding, to drive up to Hector to help tow Bambrough's broken-down vehicle back to Westport.
The next day Bambrough, who had lived in the Volvo station wagon with his two dogs, bought a replacement car for $100.
Crown prosecutor Brent Stanaway said Bambrough had promised the Volvo to McKenzie but gave it to someone else.
The day before he disappeared he had been drinking since morning, and he later took beer and wine to Lee's house to celebrate the purchase of his new car.
When Wilding arrived at the party, Bambrough embarrassed him by hugging him in front of the other partygoers while thanking him for the tow.
As the evening wore on things became tense, and Bambrough feared for his life, Stanaway said.
McKenzie was heard to say that they were going to kill him and that he hated faggots.
Towards midnight, Lee went to bed and Wilding and McKenzie drove the final partygoer home, leaving them alone with Bambrough.
The police alleged that the pair then lured him away to the Buller River on the promise of smoking cannabis, but instead choked him and held him under the water until he was dead.
Stanaway said both men then put the body in the boot of Wilding's car and then hid it in scrub near Denniston.
They moved the body three times because the ground was too stony, eventually succeeding in digging a grave at a third site.
Wilding then returned to Nelson and arranged with his brother and two others to set fire to his car in return for cannabis.
Two months later, McKenzie admitted the killing to Greymouth police, but then retracted the comments and said he had lied. At the same time, Wilding confessed to a friend.
In January 2002, McKenzie was overheard talking to an associate about the "death of a faggot".
"He said they had killed a faggot they had taken away from a party," Stanaway said.
Michelle Batt told the court she had been drinking with Bambrough from morning until near midnight but that the mood of the party had changed during the night. When she returned from collecting her daughter the atmosphere was "horrible" and "intimidating".
Bambrough stayed in the dining-room, while McKenzie, Wilding and a few others continued drinking in the lounge, and said "they're going to kill me".
"He had his arms folded, his legs crossed and he was rocking ... he was terrified," Batt said.
McKenzie had told him they were "going to waste him, going to kill him".
Batt said McKenzie and another partygoer known as Stretch had "whacked him" a couple of times during the night.
Late in the night those left at the party were acting oddly.
"I thought `something isn't right here', so I had to go," Batt said.
Bambrough pleaded with her not to leave him there but would not go home with her. That was the last she saw of him.