Heather Mills has told an employment tribunal she fell out with her nanny after refusing to pay for her breast enlargement surgery.
Sara Trumble, 26, from West Sussex, is seeking compensation from Sir Paul McCartney's ex-wife, alleging unfair dismissal and sex discrimination.
Ms Mills said they were "very close" but the relationship soured when she refused to give her £4,000 for surgery.
Ms Trumble's solicitor accused Ms Mills of telling a "very unpleasant lie".
Ms Mills, from Robertsbridge, East Sussex, was cross-examined by solicitor Nick Fairweather on the third day of the hearing in Ashford, Kent.
He accused Ms Mills of making up the issue of cosmetic surgery as a way of explaining why Ms Trumble turned against her.
Ms Mills said: "I had a breast reduction when I was 21 and I couldn't pick anything up for weeks because it was so painful.
"I didn't criticise her wanting to have a breast enlargement, I just felt it would have been wrong of me to help with something that could have been a reaction to her boyfriend or her hormones."
Mr Fairweather said: "I suggest that you're telling a very, very unpleasant lie."
Ms Mills rejected Mr Fairweather's accusation.
Ms Trumble, from Westfield, was paid £260 a week to look after Ms Mills's daughter Beatrice, now six.
The former nanny claims she was a loyal worker who was taken advantage of by the 42-year-old former model.
But Ms Mills told the tribunal that the staff working for her at her nine-bedroom house all supported one another and found her to be an understanding boss.
She said: "Our house, even in the most stressful times, was a very supportive environment."
She said of her relationship with Ms Trumble: "Sara and I have never had a cross word.
"I would never raise my voice to her and I have never been bad-tempered to her, ever, ever, ever."
Ms Mills was supported in her claims by her PA Sonya Webb, who described her boss of 10 years as a "more than fair employer".
She said: "In this claim, I feel that Sara is making issues where there really weren't any."
As she left the hearing, Ms Mills read out a two-page statement.
She said she felt as though she had "been betrayed by someone who I felt was part of the family".
She said: "It saddens me greatly that this case had to come to court.
"Sara was a young girl who I took under my wing and treated like my own daughter - I really cared for her - I believed she deserved so much more."
Tribunal judge Steven Vowles closed the four-day hearing on Thursday.
A reserved judgment will now be made, with a verdict expected to be given by the end of May.