Injunction hearing expected to challenge the validity of decision to grant John Pesutto a loan to pay Moira Deeming

A Supreme Court challenge over the Liberal Party’s $1.55m loan to John Pesutto is expected to be lodged on Thursday.

The Victorian Liberal Party is set to be embroiled in a fresh legal case with a Supreme Court challenge to John Pesutto’s promised $1.55m loan expected to be lodged on Thursday.

A group of Liberals behind the move are seeking an injunction blocking the party from loaning Mr Pesutto the money he needs to honour his $2.3m debt to colleague Moira Deeming and avoid bankruptcy.

The promised $1.55m loan to John Pesutto could be blocked. Picture: Diego Fedele

The explosive development comes just a day ahead of the deadline for Mr Pesutto to pay the debt and avoid an escalation in bankruptcy proceedings that have already been initiated.

If bankrupted he would be ineligible to sit in parliament which would force a by-election in his seat of Hawthorn.

Multiple sources have told the Herald Sun relevant parties were on Wednesday put on notice about the expected injunction application.

The party’s administrative committee last week voted to provide Mr Pesutto with a $1.55m loan.

Mr Pesutto owed $2.3m to Moira Deeming. Picture: Andrew Henshaw

A Supreme Court injunction hearing is expected to challenge the validity of that decision on the basis that it was made in breach of party rules.

It will seek to restrain the Administrative Committee from proceeding with the loan because it was not agreed to by the party’s State Council.

It is understood members behind the challenge have also written to party president, Phil Davis, and state director, Stuart Smith, calling for an urgent State Council meeting.

In the letter – understood to have been sent late on Wednesday – concerns were raised about the party’s “constitution clearly restricts the use of Party income and property to the objectives of the Party and prohibits any use ‘by way of profit or benefits to the Members of the Party’.”

“The Administrative Committee has unilaterally interpreted this provision to justify a substantial financial transaction which confers private benefit on a Party member — an act which is plainly in constitutional doubt.

“Clause 27.2 requires that such questions of interpretation be referred to the State Council. This process has not been followed.”

The fresh litigation is a blow to senior Liberals, including Mr Davis and Opposition Leader Brad Battin, who last week claimed the loan agreement would end the long-running feud between Mr Pesutto and Mrs Deeming which has plagued the party for more than two years.

Mr Pesutto was ordered to pay Mrs Deeming $2.3m in legal costs after she successfully prosecuted a defamation case against him.

It was prompted by his assertions that she had links to neo-Nazis following her attendance at a women’s rights rally on the steps of parliament in March 2023.

Mr Pesutto has already paid Mrs Deeming $315,000 in damages.

Originally published as Injunction hearing expected to challenge the validity of decision to grant John Pesutto a loan to pay Moira Deeming