Kenneth Carruthers told the High Court in Edinburgh yesterday that Paul Igoe woke him from sleep to tell him that "Martyn's shot himself". The court also heard that Mr Barclay, 26, and his girlfriend Caroline Igoe had argued over money just hours before she is accused of killing him.
Mr Carruthers said he had been out drinking with Paul Igoe and other friends the night before Mr Barclay was shot in the head in the Inch's Hazelwood Grove last 17 January. After returning to Paul Igoe's house in Walter Scott Avenue, Mr Carruthers said that Mr Barclay and his girlfriend had joined them at about 2am.
He said that the couple had clashed over money in the living room. The couple continued to argue in the hall, and Mr Carruthers said he heard Mr Barclay threaten to smash the windows of his girlfriend's mother's home.
Mr Carruthers, of Milton Bridge, Penicuik, said he was later awoken by Paul Igoe who told him Mr Barclay had "shot himself", and that the murder accused had "spots of blood" on his trainers.
Paul Igoe, 37, and his sister Caroline Igoe, 32, are on trial after denying murdering Mr Barclay.