A man once suspected by police of being involved in the disappearance of Sarah McMahon told a friend he had killed before and offered to do the same again, an inquest has been told.
Marta Allen gave evidence at a coronial investigation into the disappearance of Sarah McMahon, 20, who was last seen leaving her Claremont workplace on November 8, 2000.
The inquest has heard that police carried out two investigations and a case review over the last 12 years, one of which had focussed on the possible involvement of career criminal Donald Victor Morey - a man 25 years older than the missing woman who formed a close friendship with her and allegedly supplied her with drugs.
The investigations had raised suspicions of his involvement but no evidence that could substantiate a charge, the inquest heard, with police hoping an inquest would yield further information.
Today, Ms Allen described Morey as a "strange man" and said she had immediately wondered if he was linked to Ms McMahon's disappearance when she saw the young woman's image in missing persons reports.
"I thought then and there I wonder if Don had something to do with her disappearance," she said.
Morey - who had worked for her husband and is now in jail after being convicted in 2005 of an attempted murder of a sex worker - has denied any involvement in Ms McMahon's suspected death and is expected to give evidence in the inquest.
Ms Allen said Morey, who had lived with her husband during parts of the week in 2000, had claimed he had killed people and once asked if she was scared of him.
"He told me that he was in the SAS... that's where he was taught to kill people," she said. "He told me that he has killed before."
Ms Allen said Morey made an effort to charm women and had once offered to kill her husband Gareth Allen after eavesdropping on an argument while living at Mr Allen's home.
"He was not joking, he was deadly serious," she said.
Ms Allen said she had once been in a vehicle with Morey when he left her "petrified" and "shocked" after saying to her: "It's just you and me now, are you scared?"
She also described her shocked husband showing her a bag found in Morey's room that had contained ropes, knives, gaffer tape and pornography including images of bound and gagged naked women who "looked dead".
Ms Allen said she called the police but that Morey's partner had collected the bag before they arrived.
Ms Allen also described seeing Morey once cleaning the floor of his truck out with hot water.
"This would have been just after (Ms McMahon) appeared on TV," she said.
The inquest has heard that a person known as "witness A" told police they had been called by a frantic Mr Allen to the home he shared with Morey and was shown Miss McMahon's naked body in Morey's bedroom.
The witness claimed that Ms Allen had helped clean the home afterwards but today Ms Allen vehemently denied the claim and labelled the allegation a fabrication.
The inquest continues.