Cornelius Smit, former chief secretary of the AWB until his resignation in December 1990, told the court he believed the two were having an affair.
Miss Allan, 40, a former columnist on the Sunday Times newspaper in Johannesburg, who now lives at Hampton Court, Surrey, is suing Channel 4 Television over the film The Leader, His Driver and the Driver's Wife, which she claims portrayed her as a 'lady of easy virtue' who slept with Mr Terre-Blanche, leader of the extreme right-wing AWB party.
Channel 4 says it never suggested an affair and argues that such an allegation, although never made, would be justified because Miss Allan did have an affair with Mr Terre-Blanche, who is married with a daughter.
Mr Smit told the court he met Miss Allan soon after she first interviewed Mr Terre-Blanche in January 1988. There was talk of a book and Mr Smit offered his house in Pretoria as somewhere Mr Terre-Blanche and Miss Allan could work.
As their meetings continued - sometimes weekly, sometimes fortnightly, Mr Terre-Blanche and Miss Allan joined Mr Smit and his wife, Marie, for food and a few drinks after a couple of hours' work.
'The four of us would dance as well, in a sort of happy way. We did the twist, we did the rock'n'roll, we did the two-step, even one night we did the goose-step,' he said.
At about 3am one rainy night he received a phone call from Miss Allan. 'I was asleep in bed with my wife,' he told George Carman QC, for Channel 4.
'A rare species,' commented Mr Carman, referring to the various marital infidelities referred to by previous witnesses in the case.
Mr Smit said Miss Allan told him to go to her Johannesburg flat immediately. When he arrived at the flat he saw Mr Terre-Blanche asleep and snoring. He said his leader was 'definitely drunk', lying backwards on the lounge settee with his hands clasped on his chest, a wine glass in his hands and naked except for his underpants and a jacket on his shoulders.
Mr Carman asked if he remembered the colour of the underpants?
Mr Smit said: 'They were green and he had holes in them.'
On his legs, Mr Terre-Blanche had a pair of khaki slacks that he could not get over his knees. Mr Smit later found out they belonged to Miss Allan. Mr Terre- Blanche's own clothing - including his trousers - was soaking wet on the carpet in front of him.
Mr Smit said Miss Allan told him to take Mr Terre-Blanche away immediately. She said she did not want him in the flat as she was expecting somebody.
He covered Mr Terre-Blanche in a blanket and dragged him to his car. On the way home he was stopped by the South African police who questioned him about why he was not carrying a licence for his revolver.
Mr Terre-Blanche in the passenger seat woke up and started swearing at the police as Mr Smit drove away from the road block. The AWB leader stayed the night at Mr Smit's home.
Describing the relationship between the pair, Mr Smit said: 'I realised he liked Miss Allan - to be honest I liked her too. She's a very good friend, she's nice company. In the beginning it was very friendly, very polite. It later on developed into an intimate relationship.'
Mr Smit said that one night in April or May 1988, Mr Terre- Blanche left in his white BMW, with its distinctive '777 AWB' number plate, and Miss Allan drove off in her red Lancia Spider.
Later he drove past Mr Terre- Blanche's flat in Pretoria - which was furnished just with a double bed, two chairs and a television - and saw Miss Allan's car parked in front. Mr Terre-Blanche's car was parked in the underground garage. He went back three times that night because 'I got a funny feeling in my water', and the cars were still there. By 7am, Miss Allan's car had gone.
On another night, Miss Allan borrowed Mr Terre-Blanche's car. and checking again overnight, Mr Smit saw it parked at Mr Terre-Blanche's flat until the next morning.
The case continues today.
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