The lawyer for suspended ATSIC chair Geoff Clark has accused a publican of telling a "complete and absolute lie" about events that led to his conviction on charges of obstructing police and riotous behaviour.

The Aboriginal leader is appealing against the conviction, which emanated from an incident at Warrnambool in Victoria's south-west last year.

Five staff gave versions of what happened on May 1, 2002 at Warrnambool's Criterion Hotel.

They described how a group of Aborigines, including Clark, became upset and expressed a sense of racial injustice at a demand that Jamie Boss Chadfield not be allowed in the hotel.

The licensee, John Palmer, told the court he rang police as the group arrived, saying he wanted Mr Chadfield removed as he had been banned from the pub.

But Robert Richter QC, appearing for Clark, accused Mr Palmer of poppycock, nonsense and lies.

He said a police officer would give evidence the publican had phoned to say a group of Aborigines was coming, some of them were drunk, and he wanted them removed.

Mr Palmer repeatedly denied he had said that and agreed it would be unlawful to refuse service on racial grounds.

The court also heard descriptions of how police used capsicum spray on the group after Mr Chadfield, with Clark's support, refused to leave the hotel.

Bar attendant Rachel Jones-Lumby said several of the group became emotional and said "let's stand our ground" and "it isn't fair".

She said two police officers arrived and there was screaming as they used capsicum spray on the group.