Ray Novak, Stephen Harper's chief of staff, was told before and during a 2013 conference call that Nigel Wright would personally repay Mike Duffy's expenses, a former lawyer for the Prime Minister's Office told court, contradicting claims by the Conservative campaign.

Benjamin Perrin, testifying at the Duffy trial in Ottawa, said he, Wright (then Harper's chief of staff) and Novak were all in Wright's office on March 22, 2013, as Wright was about to make a call with Duffy's then-lawyer about the issue of the senator's expenses.

Perrin went so far as to describe the scene in Wright's office, saying that Novak, who was Harper's deputy chief of staff at the time, took a seat at the head of the table, and that Novak was seated to Perrin's right.

Perrin said he was discussing with Wright the issues surrounding an audit into Duffy's expenses when Wright said he would be personally repaying them.

"And that was the first time I ever heard that so I was quite surprised by that statement from him," Perrin said. "He had never discussed it with me or consulted with me in any way. 

"Because it was so surprising to me I immediately looked to my right to see Mr. Novak's reaction and he didn't have any reaction to that information. And the call proceeded literally within a minute of that."

He also said that Novak was present for the entire call when Wright told Payne he would be paying for Duffy's expenses.

Perrin's testimony contradicts comments from the Conservative campaign which has denied that Novak had any knowledge of Wright's $90,000 repayment of Duffy's expenses. They said he was initially part of the conference call but left before the cheque was discussed.

Wright also testified that Novak was not there for the entire call and "popped in and out."

At a campaign event in Newmarket, Ont. Thursday, Harper said Novak still had his confidence as his chief of staff.

RAW: Benjamin Perrin and Donald Bayne leave court2:09

"I've been very clear, when people are working for me, they have my confidence. If they didn't have my confidence they wouldn't be working for me," Harper said.

Novak is travelling with the Conservative campaign tour, although he is keeping a low profile. Reporters travelling on the Conservative plane in B.C. Thursday caught only the briefest of glimpses of Novak as he stepped off and onto the party's bus.

Stephen Harper on Ray Novak2:14

'Taken aback' by PM's take on residency

Earlier, Perrin said he was "taken aback" by Stephen Harper's position that an individual only needed to own $4,000 of property in a province to be constitutionally qualified to represent the region.

"I was immediately taken aback by the prime minister's decision that if you simply owned $4,000 of real property, that made you a resident," said Benjamin Perrin, testifying at the Mike Duffy trial in Ottawa.

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Prime Minister Stephen Harper talks to his chief of staff Ray Novak last week. What Novak knew about Nigel Wright's plan to cover Mike Duffy's expenses and when has become an issue at Duffy's trial. (Sean Kilpatrick/Canadian Press)

The trial, which began April 7 in the Ontario Court of Justice, resumed last Wednesday after breaking on June 18, the second hiatus of the high-profile trial. This third phase will continue until Aug. 28, and, with more time assuredly needed, break until it would resume again in mid-November.

Duffy has pleaded not guilty to 31 charges of fraud, breach of trust and bribery related to expenses he claimed in 2013 as a senator and later repaid with money from Wright. 

Perrin, who worked as a legal affairs and policy adviser to Harper from 2012-13, testified he had researched the requirements for residency eligibility and thought Harper's position, both legally and practically, seemed untenable.

Perrin testified he wouldn't consider himself a resident of Nunavut simply because he owned property there.

He said he communicated with the PMO as "diplomatically" as he could that the "view taken by the prime minister was not consistent with basic legal interpretation principles and that I didn't agree with it."

But he said the PMO stood firm on its definition.

At the time, there had been questions about whether some senators, including Duffy, met the constitutional residency requirements.

The Constitution states a senator "shall be resident in the province for which he is appointed" and must own property worth at least $4,000 in that province.

RAW: Ray Novak first off Conservative campaign plane0:10

Crown prosecutor Jason Neubauer spent Thursday morning going over emails related to discussions Perrin had with Duffy's lawyer at the time, Janice Payne, in 2013. Members of the PMO including Wright wanted Duffy to agree to a deal in which he would admit he had made an unintentional mistake and say that he would repay the expenses, at the time thought to be $32,000. 

In turn, Senator Irving Gerstein, who was chair of a Conservative Party fund, had arranged with Wright that the fund would be used to secretly cover Duffy's expenses.

But Perrin testified that while he was negotiating with Payne, he never knew about that deal and that he believed Duffy would be paying most of those expenses out if his own pocket. He said he thought the only expenses the party would cover, along with legal costs, were claims Duffy made related to party business.

With files from CBC's Laura Payton and The Canadian Press