Graham Rush, a market operator, and his wife, Barbara, of Kidmore End, near Reading, Berkshire, are suing Dagmar Coward, a teacher, over two letters she circulated on a "large scale" containing allegations of assault and lying to police.
The couple's counsel, Harry Boggis-Rolfe, told the court that Mrs Coward had allowed the boundary dispute to become an "obsession". He said that after Mr and Mrs Rush moved next door to Mrs Coward in 1989 trouble flared between them over "trivial matters".
In 1993 Mr and Mrs Rush got planning permission to build an extension. Mr Boggis-Rolfe said that after a "fracas" on 5 October 1994, as Mr Rush and his builder were attempting to work on the extension, Mrs Coward went "completely out of control". She was later convicted of assaulting Mr and Mrs Rush by wiping her bloody hands on them and was sentenced to a one-year conditional discharge. Her subsequent appeal against the conviction was later dismissed.
Mr Boggis-Rolfe said that in May 1996, Mrs Coward circulated two "highly damaging" letters containing "most dreadful" allegations about the couple.
In the first open letter she accused Mr Rush of assaulting her. She claimed he caused her wrongful arrest, prosecution and conviction by lying and also accused Mrs Rush of lying.
In her second letter, Mrs Coward accused Mr Rush and his "accomplice" Mrs Rush of committing "criminal" acts against her.
Mrs Coward, now of Headington, Oxford, denies libel.
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