Dobbs gave evidence this morning in support of Craig.
During cross-examination Williams' lawyer Peter McKnight asked Dobbs if he blamed MacGregor for the Conservative Party's poor election result.
"Do you blame her in some way for the result that was achieved, yes or no?" he asked.
Dobbs replied: "Partially".
"Had she not resigned in the way that she did, you would have gotten your 5 per cent?" McKnight continued.
"Possibly," Dobbs said.
"Do you hold any ill will towards her because of that?" McKnight probed.
"No, not at all," Dobbs said.
He said every person had their own reason for doing things and it appeared that MacGregor was "at least having an emotional affair" with Craig.
"Why she resigned is her business. But her resignation created a lot of media interest and it was the wrong type of media interest for a party two days out from an election," Dobbs stated.
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Earlier today Dobbs spoke about how Williams approached him and told him that MacGregor had claimed Craig had sexually harassed her, among other things.
The jury also heard about how, after the allegations went public and Craig stepped down as leader, the Conservative Party effectively crumbled.
"It was an extremely hectic and difficult period for me," Dobbs said.
"The extensive media coverage was severe for the party."
He explained that every board member had quit and he was the last man standing.
"I was the only board member left. I had no option but to resign as the situation was no longer tenable," Dobbs said.
"As a result of what happened, it became a media circus and unmanageable. By the time Mr Craig went public with what he said was the full picture, it was too late, the damage had been done."
Dobbs said the rumours that began to circulate after MacGregor resigned "undermined" the Conservative Party's election goal and result.
Under cross examination he admitted that before MacGregor resigned he suggested to Craig that he get "a new press secretary".
He was concerned about their relationship, which he felt was becoming too close.
Craig refused to replace MacGregor, Dobbs said, but assured him "boundaries had been put in place".
Dobbs said part of the boundaries included a chaperone for MacGregor and Craig.
Craig has previously denied there was a chaperone.
Dobbs said other members of the board had approached him with concerns about the relationship.
At one stage he demanded answers from Craig.
"I asked him to swear that he had always been faithful to his wife Helen. He said he had," Dobbs said.
When he later found out about Craig and MacGregor's kiss in 2011, he was "very concerned".
He said he "generically" counselled Craig on his relationship with MacGreogor.
"He said that boundaries were going to be put in place," said Dobbs, adding that he felt matters between the pair "improved" after that.
He said the relationship appeared on a number of board meeting agendas and he had at least three phone conversations with Craig about it.
"You're chairman of the party, what did you do about it?" McKnight said.
"How people conduct themselves is their own business. When it affects other people as it did in Colin's role, then it's a concern, which is why I spoke to him about it."
Dobbs on Craig's sauna interview
He said the 2011 kiss was "poor judgment" and concerning.
Dobbs said Craig's decision to do a media interview in a sauna following MacGregor's resignation was also concerning.
Craig was interviewed for a TV3 programmed inside an Auckland sauna.
"I was concerned about how it may come across to the voters," said Dobbs.
"The reporter was asking some sensitive questions and towards the end both people were not... it looked like a compromising situation, there were probably better places to have an interview."
Dobbs said Craig did not consult him about the interview before agreeing to it. If he had, he would have told the leader not to participate.
He told the jury he would have said "do not do it, conduct the interview in a more sensible setting".
After the interview Dobbs learned Craig had made comments that breached a Human
Rights Commission confidentiality agreement he had signed with MacGregor.
Dobbs said this was also very concerning.
He said he still supported Craig and always had, despite the issues with MacGregor and the party.
He chose to give evidence as it was the "honourable thing to do" and he "wanted to see justice prevail".
Dobbs on the Craig poems and letters
McKnight raised the issue of the poem Craig wrote to MacGregor that outlined all the things he found wonderful and beautiful about her.
Dobbs disagreed the poem was "abhorrent" but said it "disturbed" him when he read it, and it was certainly not appropriate for a political party leader to write such things to a young employee.
However, Dobbs said it was not a case of Craig, a powerful and wealthy older man, "imposing himself on a staff member".
McKnight asked Dobbs whether, after seeing the poem and other correspondence from Craig to MacGregor, whether he believed that his party leader had sexually harassed his former press secretary.
Dobbs said he believed Craig and MacGregor had a "consensual" and reciprocal relationship.
"[The correspondence] pants a picture of an emotional, consensual relationship," he told the jury.
He believed Craig did not have a "sexual attachment" to MacGregor but an "emotional attachment".
"I did not deem an emotional attachment as sexual harassment as I understood the term," he said.
The defamation trial
The defamation trial unfolded after Craig's press secretary, Rachel MacGregor, resigned suddenly 48 hours before the 2014 general election.
The resignation was high profile and there was much speculation about why she left.
Weeks later MacGregor turned to Williams for support, and told him she had made a complaint to the Human Rights Commission alleging that Craig had sexually harassed her.
She shared letters and poems the politician had sent her. Williams then revealed the details to other Conservative Party members.
When Craig found out he publicly claimed Williams was part of a group of "culprits" determined to have him removed as party leader through a "campaign" of "false accusations".
Williams then filed defamation proceedings in the High Court, saying he did not lie about Craig.
After Craig finished reading his brief of evidence to the jury last week, McKnight started the cross examination.
The trial continues.
