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There aren't normally security guards and metal detectors to pass before you can enter Saddleworth Civic Hall. But then it's never been home to two High Court judges before and an Election Court.

For the rest of this week, this quiet building will be the location for some of the fiercest political and legal arguments in the country.

The judges sit up on the stage. Below them is the official recorder who has been sent from the House of Commons. The barristers in their wigs lead two teams of lawyers on either side of the room. There is plenty of room for the public, while the media are perched on the balcony above.

The defeated Liberal Democrat candidate at the last general election, Elwyn Watkins, is petitioning the Election Court to get rid of Phil Woolas.

The core argument is that Mr Woolas thought he was going to lose and was particularly worried because the Conservatives chose an Asian candidate, Kashif Ali. Labour feared many voters would not support a Muslim candidate, and instead would vote for the Lib Dems. Therefore Labour's tactics, so the Lib Dems argue, was to destroy Elwyn Watkins's reputation so that Tory supporters kept away.

Helen Mountfield QC said Phil Woolas was willing to: "Stir up racial tension."

In her opening address, she added: "Statements were made in a desperate attempt to influence election results."

Elwyn Watkins was the first to undergo cross examination by the relentless Gavin Millar QC. The barrister's objective was to convince the court that Labour had reasonable grounds for believing the claims they made. He did not have to prove that any of them were true.

Mr Millar began with the issue of why Labour had not believed he lived in the constituency and was able to extract a number of puzzling statements from Elwyn Watkins.

When asked how long he had lived in Saudi Arabia, he struggled to answer but "guessed" it was about four years. And he admitted that he was just eight days away from being deselected as a Rochdale councillor because he had been abroad and not turned up to meetings for almost six months.

The issue then turned to the funding of his campaign.

At one point Mr Watkins declared: "I was not the major contributor." Yet later the barrister was able to prove that he had given £38, 904 to the local party. This was marginally more than the party says it spent on the entire election campaign.

And Mr Watkins admitted that several times he had paid bills which the local party could not afford.

On the issue of links to Muslim extremists, Gavin Millar revealed that known Lib Dem campaigners were leafleting with members of the controversial Muslim Public Affairs Committee (MPAC) outside a mosque. To Elwyn Watkins this was "a complete surprise."

Mr Watkins was also cross examined about his working relationship with Rebecca McGladdery. She was the woman who left his team alleging she had been secretly paid to work as a volunteer.

Sitting in the witness stand, Mr Watkins was asked whether she had complained to him of a sexual assault by another councillor. Mr Watkins did not seem sure so asked for the date. When told it was Christmas 2009 he responded: "I have no recollection of her telling me about that."

But while clearly under pressure, Mr Watkins was able to hold his own. There were no major revelations, no shock evidence of campaign finance fraud or proof that he was mixing with Muslim extremists.

He told the court that he was living in the constituency and did not own property elsewhere.

He had made generous donations to his campaign but all these were properly declared.

He denied funding his entire campaign but said he was one of several legal donors.

His tax affairs were in order, it was: "ludicrous to think of me as a non-dom."

He called Rebecca McGladdery a "liar" who he asked to stay away after she assaulted one of his staff.

He said he had avoided MPAC and did not even know they had endorsed him on their website until after the election.

Significantly Mr Watkins was able to argue that the allegations had damaged his personal character, not just his politics. "If you state someone is getting money illegally from abroad that does affect my character."

There was surprise that the court also heard from Phil Woolas on the first day. He was cross examined by James Laddie, a barrister with a very sharp edge.

Mr Laddie got straight down to business, challenging Mr Woolas over the way a photograph of Elwyn Watkins had been altered. In the Labour leaflet Mr Watkins appeared to be being led away by police officers.

Mr Woolas denied the photo had been doctored: "I think they call it a superimposition."

He said it was obvious to readers the photo was not real. But Mr Laddie suggested that was: "Fanciful, except to the sharpest eye or the most suspicious reader."

The court was told that Mr Woolas had attacked his Lib Dem opponent in 2005, Tony Dawson, for similar tactics: "When you send out election addresses, it has to be right," Mr Woolas was quoted as saying at the time.

The barrister also challenged him over why his had not been handed to the lawyers.

Mr Woolas said the diary was in the House of Commons. But he did not know if it was possible to hand over because it contained some personal details.

Mr Laddie referred to the published extracts pointing out that in January 2010 Mr Woolas was expecting to lose. The MP denied that saying his mood was up and down.

Byy the time two of the contentious leaflets had been published, Mr Laddie said the diary entry indicated his mood was changing: "It's moving our way."

The barrister asked him whether at one point he: "Felt like a superman?"

"Yes."

"A superman can't be stopped. Correct?" asked Mr Laddie.

At this point Mr Woolas looked irritated: "I suppose so."

But Elwyn Watkins's lawyers will be doing all they can to stop Mr Woolas when his cross examination continues on Tuesday.

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