Breakaway Liberals in new legal bid to recoup $1.55m pay out

A Liberal splinter group has dragged the party into further chaos, launching a new legal bid to force Moira Deeming to repay a $1.55m loan.

The Victorian Liberal Party’s administrative committee is at war, with a new legal bid to force Moira Deeming to pay back the $1.55m she received from the controversial Pesutto loan deal.

If successful John Pesutto — who was loaned $1.55m from the party to help repay the $2.3m he owed Mrs Deeming — would face a renewed bankruptcy threat and disqualification from parliament.

The Herald Sun can reveal four members of the administrative committee — Erin Hunt, Anthony Schneider, Ian Pugh, and Marcus Li — have joined Colleen Harkin as plaintiffs in a Supreme Court challenge to the loan, which was approved by the committee last month.

It pits them directly against the committee’s other 14 members in a legal case sources connected to the matter say could last up to 12 months, potentially embroiling the party in ongoing controversy until the eve of next year’s state election.

Mrs Deeming has now also been joined to the matter as a defendant.

Ms Harkin last week lodged an urgent application with the Supreme Court in an attempt to block the payment of the loan from the party to Mr Pesutto and consequently to Mrs Deeming.

She argued the loan was invalid under the party’s constitution.

The group wants the loan — already paid to Moira Deeming — to be repaid in full. Picture: David Crosling

But the money was paid by Liberal Party entity, Vapold, before the matter was first heard in court.

Now, in new documents lodged with the court, the five-member group wants the $1.55m loan to be repaid in full, with a declaration that the funds are held in trust for the Members of the Victorian Liberal Party.

They also want the court to declare that Vapold directors Alan Stockdale, a former Victorian treasurer, current party treasurer Karyn Sobels and Christopher Pearce “have acted in breach of trust by paying the funds to the trust account of (lawyers for Mrs Deeming) Giles George.”

If successful, Mr Pesutto would again owe Mrs Deeming $1.55m and face the potential of fresh bankruptcy proceedings.

If ultimately forced into bankruptcy Mr Pesutto would be ineligible to sit in parliament which would trigger a by-election in his seat of Hawthorn.

Senior Liberals had hoped clearing the loan would end the more than two year legal saga between Mr Pesutto and Mrs Deeming.

Sources familiar with the fresh legal action said it would be forcefully prosecuted as a matter of principle.

They say the loan should have been considered by the party’s State Council.

If the group was successful, Mr Pesutto’s political career would be back in jeopardy. Picture: David Crosling

More than 70 party members have now signed a request to state director Stuart Smith to convene a special meeting of the party’s State Council to also deal with the matter.

Party rules stipulate a special meeting must be convened at the written request of at least 50 members.

But they also allow an almost three month window for the meeting to be held.

The next general State Council meeting is set to take place in September.

Party President Phil Davis said last month the Pesutto loan agreement would allow the party to focus on the election.

“By ensuring that Mrs Deeming has been paid, there will be no Hawthorn by-election, and the State Parliamentary team can focus on the urgent needs of the Victorian community, particularly campaigning to change the government at the 2026 Election,” he said.

“Victorians need a change of government. By ensuring that Mrs Deeming gets paid what she is owed, the Party will be stronger as we head towards November 2026.”

Those sentiments were echoed by Opposition Leader Brad Battin who has now also been drawn into the legal case as a defendant.

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.