The associate, who cannot be identified, claims he was with Steven Frederick Johnson, 74, when Christopher Jarvis was allegedly killed in June 2006.
He gave evidence in the Victorian Supreme Court on Tuesday as Johnson stands trial for Mr Jarvis's murder, which he denies.
Mr Jarvis, 38, was last seen leaving his home in Wangoom, near Warrnambool in Victoria's far west, about 6am on June 13, 2006.
The Crown alleges Mr Jarvis was attacked in his driveway by his landlord Johnson and the other man as he tried to leave for work.
Johnson had told the man he wanted to evict Mr Jarvis because he had failed to keep up with rent and car repayments, the man said.
"Johnson just wanted him out of the house no matter what - he said the prick had to go," the man said in his evidence.
The man believed Johnson only wanted to "rough (Mr Jarvis) up" through a fist fight but the situation escalated, the jury was told.
He claimed when they confronted Mr Jarvis, Johnson struck him to the back of the head with a starter pistol.
Mr Jarvis started screaming the man's name and begging for help so Johnson grabbed his mouth to quieten him down, the man said.
Johnson appeared nervous as he then fumbled with the pistol before shooting Mr Jarvis in the ear, the jury was told.
The man claimed Johnson ordered him to help lift Mr Jarvis into the car while he was bleeding and moaning.
"I said to Steve I'm not f***ing touching him because this had gone too far - this was out of control," the man told the jury.
But he ultimately helped Johnson move Mr Jarvis into the boot of the car and drove with him to a remote forest, the man said.
He described to the jury how Johnson allegedly dug a shallow grave using a mattock before dragging Mr Jarvis out of the car and stripping him naked.
Johnson then went back to the vehicle, took out a baseball bat and struck Mr Jarvis in the head to kill him, the man claimed.
"Mr Jarvis was making slight groaning noises and then everything went dead quiet - there wasn't a sound," the man said.
He described how the two men then dumped Mr Jarvis' car at Thunder Point in Warrnambool and set fire to the vehicle.
"You say anything about this and you're f***ing next," Johnson said, the man testified.
The message was clear.
"I took that as a death threat," the man told the jury.
Johnson, who has pleaded not guilty to murder, has accepted there was a dispute over rent but has vehemently denied being involved in any violent assault.
The trial continues.
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