Hall was last seen at his Pitangi property, which is located off of the Whanganui River Road between Parikino and Atene on May 27, 2011.
Crown prosecutor Michele Wilkinson-Smith said that Lyttle was in debt and was using money that Hall had given him to build a house, to pay for his day-to-day living costs.
"Brett Hall loved the remote farm property at Pitangi and he was determined to build a house there," Wilkinson-Smith said.
"There was an argument at the site where the house was being built and David Lyttle shot Brett Hall."
It is then alleged that Lyttle carved Hall's body up with a Stanley knife and a handsaw before putting the pieces into black rubbish bags.
"On Friday he staged the scene to make it look like Brett Hall went hunting," Wilkinson-Smith said.
"At first he hoped that the police might simply think that Brett Hall had gone missing."
The court then heard that Lyttle had driven a quad bike up near the bushline where he left it parked and then left an empty firearms case lying on the floor of the caravan Hall lived in.
Wilkinson-Smith said that a fire was also lit leaving behind ash.
Two days later, CCTV footage picked up Lyttle's vehicle passing back and forth between Turakina and Bulls on Sunday, May 29 2011.
The Crown alleges that he was looking to bury the body of Hall at the beach, but Lyttle said he was going fishing.
"There is no dispute that in the early hours of Sunday morning, he wanted to access the beach," Wilkinson-Smith said.
"He later told undercover officers that he buried the body in two locations."
Defence counsel for Lyttle, Christopher Stevenson said that his client had lied to the undercover officers, who were trying to scam him.
The officers were posing as members of a criminal group trying to lure Lyttle into their organisation so that he could participate in high-earning crimes.
Stevenson said that eventually Lyttle was told that he had earned an interview with the "big boss".
"They said 'you get through the interview, if you get into the operation, big payday,'" Stevenson said.
Stevenson said that when initially prompted by the undercover officer of whether he was involved in the disappearance of Hall, Lyttle said he'd had nothing to do with it.
However, he later admitted it when it was made clear to him by the officer that his initial answer was unacceptable and that he wouldn't be included in the operation or make any money.
The first witness to take the stand in the court yesterday was Hall's mother, Levona Joan Hall.
There are 59 other witnesses to appear in the trial, that could take up to 10 weeks to reach a conclusion.
