The 57-year-old, who worked as an airline captain for Jetstar at the time it's alleged he killed the two campers, has pleaded not guilty to murder.
Mr Hill, 74, and Mrs Clay, 73, went missing after going camping together at Bucks Camp in Victoria's alpine region in March 2020.
The prosecution opened its case against Lynn on Tuesday, where it alleged he intentionally murdered Mr Hill and then Mrs Clay.
Lynn said he burnt the bodies of Carol Clay and Russell Hill but didn't murder them. (HANDOUT/VICTORIA POLICE)
"Mrs Clay is very unlikely to have provoked a violent confrontation involving a firearm, other than having witnessed or been aware of Mr Hill's violent death," prosecutor Daniel Porceddu told the jury.
He pointed to Lynn's conduct after the alleged killings as evidence he committed murder, including not calling for help, contaminating the scene and concealing evidence.
However, Dermot Dann KC said Lynn did not commit murder and his involvement in the deaths was accidental.
Citing Lynn's police interview, he said Lynn confronted Mr Hill about his drone at the camp grounds, on March 20, 2020.
Lynn claimed Mr Hill threatened to show police drone footage of him hunting deer near Bucks Camp, Mr Dann said.
Later that evening, Lynn said Mr Hill took a gun from Lynn's car and accidentally fired a bullet into Mrs Clay's head.
Mr Hill allegedly turned on Lynn with a knife, Mr Dann said, and as Lynn tried to defend himself the knife went into Mr Hill's chest.
The barrister said Lynn then made "a series of terrible choices" including burning Mr Hill and Mrs Clay's campsite and driving to the Union Spur Track, near Dargo, where he unloaded their bodies.
He returned to the burial site twice in 2020, including to burn their remains in November, Mr Dann said.
"I haven't behaved well, I've made some poor decisions, but murder, as I understand it, I'm innocent of," Mr Dann said Lynn told police.
Six witnesses are due to give evidence before the jury, when the trial resumes on Wednesday morning.
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