The court heard Mrs Mitchell and Mr Edminstin had known each other for many years and regularly communicated on local issues.
During 2011, there were a series of telephone calls between them over several matters, including a petition Ms Bell had organised seeking the rezoning of part of the town.
Mrs Mitchell said some of the calls deteriorated into abuse from Mr Edminstin but Mr Edminstin said they were "friendly". He conceded he might have "used swear words in conversation, as she did".
Mr Edminstin had asked Mrs Mitchell and the board to apologise to Ms Bell over comments made about Ms Bell by two male board members.
During the October board meeting, a motion that the board apologise to Ms Bell was moved but no one seconded it.
The board proceeded to the next item on the agenda, at which point Mr Edminstin stood up to leave the room and was heard and seen by several people to look towards Mrs Mitchell and call her the offensive name.
Mrs Mitchell said she did not hear the comment and was told about it afterwards.
An article about the comment and its background appeared in The Southland Times newspaper and on its website. Mr Edminstin immediately wrote a letter to the editor apologising if his words had caused any offence.
Mr Corkill said there were several aspects to a defamation case, including the words themselves and the context in which they were said, whether the words had been published and by whom, whether the words in this case were covered by "qualified privilege" because they were said at a local body meeting, and whether the defendant had retaliated in defence to harassment or a false accusation.
Mr Edminstin said he considered himself an honest, straight-forward person who often spoke loudly because he was "a bit deaf".
He said the words because he was frustrated, he told the court.
He believed Mrs Mitchell had lied during the meeting about her part in the rezoning issue, and had planned to lay a complaint with the police, although he never did that.
He said he had meant the words about her being a liar "because I can prove that", but the "other word came out at the end".
He did not mean to say that word and "deeply regretted using it," he said.
When contacted by a reporter the following day he acknowledged saying the words but said it was a private comment and he did not want to see it in print.
Ms Bell said while the remark was made to her, she realised it was being said about Mrs Mitchell and that others may have heard it because Mr Edminstin always spoke loudly.
"It would have been widely understood to be John letting off steam. I understood immediately the words weren't meant to be taken literally."
Judge Kellar reserved his decision.
