All Blacks manager Darren Shand has spoken of his "shock" at the discovery of a listening device in one of the team's meeting rooms in a Sydney hotel.

Shand is the first witness in the police case against the team's security consultant Adrian Gard, who is charged with one count of a false misrepresentation resulting in a police investigation.

Police allege Gard gave a false statement to investigators, namely he found an "unlawful listening device" hidden inside a chair, in a room at the Intercontinental Hotel in Double Bay.

This was where the All Blacks were staying ahead of the Bledisloe Cup fixture in Sydney in August last year.

Gard denies the charge and a two-day hearing at the Downing Centre Local Court in Sydney in front of Magistrate Jennifer Atkinson started today.

Shand, giving evidence from Christchurch by audio-visual link, said Gard had worked for the All Blacks since 2005.

On Saturday August 13, 2016, a week before the test, Shand said he spoke with Gard about organising a security sweep of the training grounds, as well as the team and coaches' rooms in the hotel.

While Gard had previously done these sweeps himself, Shand asked him to hire another contractor with specialist equipment

"We needed to do it thoroughly and do the job properly."

On the Monday, around 5pm Shand said he got a phone call from Gard who said "you need to come and see me", or words to that effect.

"There was a sense of urgency in his voice, he needed to see me immediately. I went straight up to his room," said Shand.

When he entered Gard's room, he saw two or three conference room chairs.

"The chair that was closest to me I could see the foam of the chair, what looked like a battery and wires still in the chair, wire running along top of the foam.

"I don't recall exact words, my recollection is, 'what is that?' Basically both of us staring in shock... the realisation it was some sort of listening device."

His recollection of how the bug was discovered was that abnormal readings were found on two of the chairs and they were taken up to Gard's hotel room to be examined.

Shand alerted hotel management, who in turn hired private investigators to find out what happened.

"I very much saw the investigation as the hotel's responsibility, not mine, then come to us with answers."

That night he informed other senior members of the All Blacks management, Steve Hansen, Ian Foster, Gilbert Enoka, as well as NZRU chief executive Steve Tew, who was in Rio for the Olympics.

The following day, he met with hotel management and two private investigators.

In his evidence, Shand said he was not really involved in the investigation, until a second meeting on Friday.

It was at this second meeting, Shand says, that he learned for the first time that planting a listening device was a criminal offence.

"I was not aware of that... that did surprise me," Shand said, of learning that three days after the private investigator introduced himself as a former police officer.

Shand told the All Blacks management team, with Tew now joining them from Rio, and they decided the police should take over the investigation from the hotel.

The following morning, on the day of the test match, Shand said he asked the hotel management to alert the police, although he could not remember what time.

He will continue to give evidence today.