The Australian Idol winner in the NSW District Court on Wednesday was questioned about his contractual agreement with his ex-manager and 6 Degrees founder Titus Emanuel Day.
Defence barrister Dominic Toomey SC asked Sebastian if he believed he had obligations to pay his client commission fees.
"I definitely was aware there were obligations, I was paying Mr Day about half a million a year so I was acknowledging my end of the bargain," Sebastian said.
After he won the televised singing contest in 2003, he eventually worked with Day at 22 Management before the manager poached him to become his foundation client at new company 6 Degrees.
He denies there was any signed contract between the pair, and said Day assured him multiple times they would continue operating under the same terms at 22 Management.
Day also offered him equity in the firm to show him his gratitude, and he believed he was part-owner before their relationship broke down, he said.
Once the pair finally split he believed it was fair to pay him trailing commissions for work he had performed before their agreement ceased.
"I just wanted to be true to my word with Mr Day," Mr Sebastian said.
"I had said to him ... anything you'd worked on, I'll pay you commission on."
Mr Toomey queried whether Sebastian had paid him "out of the goodness of your heart" while he was working for him.
"No he was my manager."
The Crown alleges that Day - who managed Sebastian via 6 Degrees between 2009 and 2017 - embezzled Sebastian out of almost $900,000 between 2013 and 2020.
Day, 49, has pleaded not guilty to 50 charges including fraudulently embezzling money allegedly owed to Sebastian through royalties and performance fees.
He also denies 50 alternative counts of larceny, or stealing.
Sebastian also denied withholding any information from detectives after accusing Day of criminal activity in 2020.
"I presented every email I've ever sent to the police," he said of a document shown to him in court.
"I would have no reason to not present this, there is no reason for me to not submit this email."
The trial is due to continue on Thursday when Sebastian will resume his evidence.
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