A friend of the girl known as JC rejected claims by Dawson's solicitor Greg Walsh on Wednesday that his client and the then teenager had a relationship in 1980 and 1981 before JC had graduated.
"It wasn't a relationship. It was molestation ... I object to it being called a relationship," the friend known as KL said.
KL said that while she was a student, she felt JC and Dawson's interactions were weird and upsetting.
"Didn't students, to your knowledge, get crushes on teachers?" Mr Walsh asked.
"No, teachers preyed on students," KL replied.
She described Dawson as flirtatious and vain, and said JC would often be seen standing in the doorway of his office at the school.
Dawson, 73, is accused of murdering his wife Lynette Dawson and disposing of her body in January 1982 so he could have an unfettered relationship with JC, who is now 58. He has pleaded not guilty to the charge.
On Wednesday, KL said she believed Dawson was guilty of either murdering his wife or arranging it.
In a police interview from January 1991 played to the court, Dawson said his wife left their Bayview, Sydney, home and rang him three times in early 1982 saying she needed time to think things through after the couple experienced marital issues.
Dawson told the police that a religious sect had asked his wife to join them before her disappearance. He also said that during a 1985 high school reunion, he had heard she had moved to New Zealand.
Mr Walsh referred to diary entries by Mrs Dawson's mother Helena Simms from May 1982 saying her daughter had been sighted at a shopping centre in Narraweena on Sydney's northern beaches.
One of Mrs Dawson's friends, Robyn Warren, said Dawson had called in mid-January 1982 asking if his wife was with her. He claimed she had left the house that morning to exchange some clothes in Chatswood but had failed to meet him at Northbridge Baths where he worked as a lifeguard.
Ms Warren said Ms Dawson was concerned about her husband's decision to move JC into their home in late 1981 while the teenager studied for her HSC. Ms Dawson was also upset after finding JC sitting in her husband's lap during a game of stacks on the mill while babysitting, the court heard.
Ms Warren admitted she had never seen Dawson assault or insult his wife, saying that he was always affectionate and respectful towards her.
Earlier on Wednesday, KL described a time when Dawson drove from Sydney to South West Rocks to pick up JC in January 1982 while the friends were having a camping trip after the HSC. On seeing Dawson unexpectedly, JC cringed.
KL said that during a Sydney car ride after JC and Dawson broke up in 1990, JC said she believed her former husband had paid in cash for a hitman to kill his wife.
JC described Dawson parking his car somewhere, taking a brown paper bag out of the glovebox and entering a building.
"She said she felt it was money to pay someone to kill Lyn or who had killed Lyn," KL said.
JC has previously told the court that on that car trip, Dawson did not actually hire the hitman but changed his mind because innocent people could be hurt or killed.
Also giving evidence on Wednesday, JC's younger sister claimed she had been teased while in high school because of JC's relationship with Dawson.
Other students had taunted her by singing, "young teacher, the subject of schoolgirl fantasy," lyrics from the 1980 hit song by The Police, Don't Stand So Close to Me.
JC's sister said the taunts made her cringe and feel embarrassed.
The NSW Supreme Court trial continues Thursday.
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