I like Unearth77's interpretation too; I never thought of it that way.
It always sounded to me like a guy, who was already in a relationship, had sex with a girl once (probably when one or both of them was drunk or something like that). "The situations are irrelevant now" means he doesn't care how they met up or that he's already taken, he just wants to have sex with her. What was intended to be a one night stand ended up turning into a full-on affair. They continued having sex, but agreed to not say anything about it. The girl started getting uncomfortable with it, but he tried convincing her that it was alright ("You know you love all the lies") and that it made their relationship more exciting. She ended up getting fed up with it and started telling people about it. He (still trying to keep his other girl) denied everything she said, hence the "Honestly that never happened, lying is your favorite passion".
I like Unearth77's interpretation too; I never thought of it that way. It always sounded to me like a guy, who was already in a relationship, had sex with a girl once (probably when one or both of them was drunk or something like that). "The situations are irrelevant now" means he doesn't care how they met up or that he's already taken, he just wants to have sex with her. What was intended to be a one night stand ended up turning into a full-on affair. They continued having sex, but agreed to not say anything about it. The girl started getting uncomfortable with it, but he tried convincing her that it was alright ("You know you love all the lies") and that it made their relationship more exciting. She ended up getting fed up with it and started telling people about it. He (still trying to keep his other girl) denied everything she said, hence the "Honestly that never happened, lying is your favorite passion".