David Bain's sister, Laniet, told her employer that she had been having sex with her father and planned to go to police.
Stephen Cousins employed Laniet on a part time casual basis in his dairy, around the corner from the Bain home in Dunedin.
Mr Cousins said Laniet told him that she had been having sex with her father while her family had been living in Papua New Guinea and when they arrived back in New Zealand.
Mr Cousins said Laniet told him she planned to go to the police.
"She appeared to be kind of worried," Mr Cousins said.
He said he offered to go with her to the police to be a support person.
Mr Cousins said Laniet only worked with him "a few times" over a two to three week period before he sold the business in 1993.
Under cross-examination by Crown prosecutor Robin Bates, Mr Cousins was asked if Laniet appeared "needy". Mr Cousins said: "Not at all".
Earlier Mr Cousins told the court that he had been asked by a group of girls to employ Laniet so she could "turn her life around".
He said the girls told him Laniet was being sexually abused by her father.
Earlier today, friends of David Bain gave evidence and said David Bain could have been an international opera singer had he not been convicted for the murders of his family.
A number of friends and longtime supporters have given evidence in his defence at his murder retrial at the High Court in Christchurch today. Most knew Bain through the productions and plays he was involved in, in Dunedin in the early 1990s.
Catherine Spencer worked in Otago University's German department and helped translate Bain's music. She was aware he wanted an international singing career, and felt knowing another language would help.
Friend Lindsay Robertson agreed Bain had a beautiful nice deep tenor voice.
"Jonathan Lemalu would be someone that I would say Dave could have turned into, something like that."
None of his friends agreed that he was "nerdy", choosing to instead describe him as a friendly, outgoing, warm gentleman who could relate to a range of people.
Previously, Robin Bain was described as a "walking cadaver" who was "not capable of carrying out his duties" after problems were raised about the standard of teaching at his school by Ministry of Education officials.
Joan Withers was an inspector for the Education Review Office and visited Taieri Beach School where Robin Bain was principal.
She told the high Court that Robin Bain was not the typical sort of principal she came across while carrying out inspections.
"His demeanour was such that he had no warmth, no human reaction and that was what really made me feel that he was not capable of carrying out his duties," Ms Withers said.
She said she found little work in his students' books and no assessment of their reading age.
Ms Withers said Robin told her: "I know I haven't done these things."
She said when she first arrived at the school, she found Bain on the school computer with two or three students around him.
Ms Withers told the High Court in Christchurch that when the morning bell went, Robin did not show any interest in starting the lesson and students began coming into the classroom.
"They were virtually playing, it was a very chaotic scene," Ms Withers said.
She said a second report carried out had shown improvement at the school but she could not say who carried out that work.
Under cross-examination, Ms Withers confirmed to Crown prosecutor Kieran Raftery that the second report was better than the first with 14 of the 16 concerns raised by the ERO addressed.
Earlier this morning, two women who were in rehearsals for a play with David Bain in 1994 gave evidence that Bain was not wearing glasses on the day before the murders.
Their evidence is important because the Crown has argued that Bain was wearing his mother's glasses, a lens of which was found in his brother Stephen's room. The defence argues that Bain did not wear any glasses in the days leading up to the murders.
Sarah Gallagher and Sarah Cummins were both in the chorus with Bain for a performance of the play, Oedipus Rex.
Ms Gallagher described Bain as a "very nice man".
- with NEWSTALK ZB
Bain trial: Laniet was going to police over sex with Robin, court told
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