Giving evidence at the murder trial of her former friend Narelle Fiona Smith, Julia Strafela said her South Coogee neighbour and sometimes lover Peter McCarthy had become irritated with the accused before his death in December 2020.

“Peter told me he loaned Narelle some CDs … and he was having trouble getting them back,” Strafela said.

A neighbour of Peter McCarthy says he had become irritated with his accused killer.
A neighbour of Peter McCarthy says he had become irritated with his accused killer. (AAP)

She could not recall when the issue arose but said the 77-year-old talked about wanting the CDs returned.

The pair had also argued over $30 the aged pensioner had loaned to Smith.

When Strafela raised McCarthy in conversation, Smith responded negatively, the Supreme Court jury was told.

“She called him a dog,” Strafela said.

“I decided to stop doing that (mentioning McCarthy) as I didn’t want to get involved in dramas.”

Mr McCarthy at Club York in Sydney’s CBD on December 16. (Supplied)

After learning of McCarthy’s death, the witness began drinking at her apartment, before meeting friends for drinks.

She also texted Smith telling her: “Not to worry about the CDs. Peter’s dead.”

No reply was received.

Smith has pleaded not guilty to murdering McCarthy after spending the day celebrating her 46th birthday on December 17, 2020.

McCarthy’s bloody body wasn’t found until December 20, face-up on the loungeroom floor, loosely covered in a tarp and a jumper, and surrounded by broken furniture, glasses and a frying pan.

Prosecutors allege a man known by Smith used McCarthy’s ATM cards after the murder and that Smith herself used his Opal card to travel around Sydney.

On Tuesday, Strafela said she and McCarthy used one another’s cards and had exchanged PINs – but said she did not have his PIN memorised.

“I didn’t need it,” she said

“We would use it (one another’s cards) when we were hungover.”

The trial continues.

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