An 80-year-old man accused of child abuse denied saying the girl must have dreamed the allegation against him.
Dennis Rudd was giving evidence during his trial at Teesside Crown Court for indecent assault of a child.
The jury heard earlier from the alleged victim that she told her mother at the time what had happened to her.
Her mother did not call the police, but confronted Rudd who denied the allegation, saying the girl must have dreamed it.
Rudd told the jury he always denied sexually assaulting the girl.
“I did not do it,” he said. “But neither did I say she must have dreamed it.
“I was just devastated that anyone would think I would behave in that way, or that I would even be capable of doing that.”
The alleged victim told the jury Rudd put his hand on her private parts, before asking if she liked it, and would she like him to do it again.
When confronted two weeks later by her mother, the alleged victim said Rudd told them if they wanted to take the matter further, they would have to call the police and go to court.
The prosecution claim Rudd made those remarks to frighten and intimidate his alleged victim.
“That’s not correct,” said Rudd. “I didn’t mention the police or the court.
“Why would I when nothing had happened that would need the police or the court?”
Rudd, of Sea View Park Homes, Easington Road, Hartlepool, denies one charge of indecent assault of a child.
The jury is expected to retire to consider its verdict today.