Legal challenge to reverse Liberal Party’s $1.55m loan to John Pesutto set to drag on for months

A legal challenge to reverse the $1.55m loan to John Pesutto is now set to drag on for months, amid damning polling for the party.

A legal challenge to reverse the controversial $1.55m career-saving loan to Liberal MP John Pesutto is set to drag on for months, with a planned court hearing on Wednesday now scrapped.

The Herald Sun can reveal a new timetable has been put in place that will see the matter plague the party until at least the end of September.

And if the matter can’t be settled out of court, it is now firmly on track to extend well into next year and threaten the party’s chances of a clear run to the 2026 state election.

Five members of the party’s administrative committee have launched a Supreme Court challenge to the loan, which was approved and paid last month, arguing it falls foul of party rules.

They have taken action against 18 defendants including party president Phil Davis and Opposition Leader Brad Battin who were key to orchestrating the loan deal which allowed Mr Pesutto to pay his $2.3m debt to colleague Moira Deeming and avoid bankruptcy.

John Pesutto’s political career would be back in jeopardy if the loan was recalled. Picture: David Crosling

Mrs Deeming has also been listed as a defendant in the case, with the breakaway Liberal group wanting the court to force her to repay the money: a move which would restart bankruptcy proceedings against Mr Pesutto.

The matter was due to be heard in court on Wednesday.

But a new timetable has been put in place that will see mediators appointed to try and settle the case.

That mediation is due mid September, with a report back to the court expected by September 19, before the matter returns to court on September 25.

If the case can’t be settled it would then face the prospect of going to trial which could take several months by time it is listed, heard and decided.

Any outcome would then be subject to an appeal period.

Senior Liberals had hoped the loan deal would finally end the ongoing saga between Mrs Deeming and Mr Pesutto, which began in March 2023 with his attempts to expel her from his party room while Opposition Leader.

But the matter continues to haunt the party with Mr Pesutto’s successor, Mr Battin, conceding it was distracting from the work of opposition.

The loan deal has intensified some internal rivalries, and driven a wedge throughout the broader party membership.

It comes amid damning polling for the party which this week showed it was firmly on track to lose a fourth successive election.

It would mean its next prospect of forming government would come in 2030 — 20 years since its last election win.

The Liberals new leadership team of Brad Battin and Sam Groth are struggling to cut through the noise. Picture: David Crosling

Redbridge polling shows the Coalition’s primary vote has dropped to 38, five points lower than when Mr Battin took over as Opposition Leader in December.

At that time the Coalition was leading Labor 51 to 49 on a two party-preferred basis with a primary vote of 43 — its highest since 2017 — putting it in an election winning position.

But the latest polling shows voters across all age demographics, as well as women, Christians and tertiary-educated voters have all turned away from the embattled Coalition.

It has also lost support among migrant voters and across inner, middle and outer suburbs with suburban voters, but is attracting regional voters, suggesting some impact on its lobbying against the government’s new emergency services levy.

Labor has also recovered its two-party preferred lead over the Coalition 51.5 to 48.5.

When he successfully staged a coup to wrestle the leadership from John Pesutto in the days after Christmas, the Coalition had been steadily improving its polling numbers for well over 12 months.

Not once since September 2023 did the support for the Coalition decline despite the legal saga involving the then leader.

Support for the Coalition has only gone backwards since the change of leadership with internal critics arguing the party has taken too long to formulate and communicate policy positions and establish itself as a viable internal government.