Christopher John Lavery, who is charged with murder, is also alleged to have later admitted killing Mr Russouw to the friend, before threatening to kill him too if he ever told anyone what he knew.

Mr Russouw, 24, had his throat slashed while in his car in the Burwood East reserve where he did drug deals, late on the night of March 7, 2008.

His car was then set alight.

A man referred to as Witness A told Melbourne Magistrates Court on Tuesday that Mr Lavery, 31, said he had "a thing come up" and offered to pay his friend $150 to go to the movies at Forest Hill Chase shopping centre.

Witness A said he found the request weird, but needed the money, and so did not ask why Mr Lavery wanted to pay him to go to the movies.

"It's a good question. I can't answer that. Ignorance maybe," he said.

Witness A said that while seated in the cinema, Mr Lavery asked to swap clothes with him and left early into the screening.

He said his friend had said he would be back before the movie ended, but when he wasn't, Witness A panicked.

"I started freaking out because he had my shorts on and the T-shirt and I didn't know where he was," the witness said.

"I realised I couldn't trust someone, I was a very trusting person ...

You know what changed? I realised this person might have been doing something he shouldn't."

The court heard there were only two others in the cinema when the men swapped clothes, even though it was a Friday night.

"Yes, but it was Rambo," Witness A told magistrate Luisa Bazzani.

The pair had used cannabis and amphetamines during the day, the court heard.

Witness A said Mr Lavery had instructed him what route to take when leaving the cinema that night and to keep his head down.

Later, the court heard, Mr Lavery picked up his friend from Witness A's home, by which stage Mr Lavery was in new clothes.

The pair drove to a dumpster, the court heard, and Mr Lavery got rid of Witness A's favourite shorts.

Witness A said he protested because he "loved" his shorts, but was told he would be given money for them.

He said he saw a red spot on them.

The next day, the court heard, Witness A went to Mr Lavery's home, where he found several people who were upset at learning of Mr Russouw's death.

It was at the unit, the witness said, that Mr Lavery paid him the $150 and admitted killing Mr Russouw, but also threatened him.

"He said 'You know how I did it, right? I set up a deal, I sat in the back seat and slit his throat and set the car on fire and if you ever tell anyone I will kill you and your family'," Witness A said.

He said in the days after Mr Russouw's death he was given a wad of money, containing thousands of dollars, by Mr Lavery.

Witness A said he considered going to the police at the time but was scared of Mr Lavery and feared he had been framed. He said he never told anyone about what happened until police contacted him last year.

Over the following years he did internet searches of the case, he said, but also spent time trying to suppress memories.

He said Mr Lavery once told him he had trouble paying the rent. Another witness told the court Mr Lavery had started gambling while at school and by 2006 admitted to a debt of $19,000.

The hearing, which will determine whether Mr Lavery stands trial, continues.