Deeming’s costs could bankrupt Pesutto. This donor doesn’t care

Liberal elders Tony Abbott and Jeff Kennett mounted failed attempts to save former opposition leader John Pesutto from possible bankruptcy to spare the party a state byelection and further embarrassment during the federal election.

But a NSW developer said he had given Liberal MP Moira Deeming a “blank cheque” to pursue costs from Pesutto and everyone who supports him.

John Pesutto leaves the Liberal party room on December 27 last year after losing the leadership.Credit: Eddie Jim

Pesutto was ordered to pay Deeming $300,000 in damages, as well as her legal bill, when the Federal Court in December found he repeatedly defamed her by falsely implying she associated with neo-Nazis. Both parties were represented by high-profile barristers for the weeks-long trial, with Sue Chrysanthou, SC, representing Deeming and Dr Matthew Collins, KC, for Pesutto.

The court has been hearing debate on what that figure should be, with Deeming’s team seeking almost $2.4 million. That, on top of his own costs and the damages bill, would push Pesutto perilously close to bankruptcy despite financial support from all living former Liberal premiers, including Kennett, Ted Baillieu and Denis Napthine.

Bankruptcy disqualifies anybody from being a member of parliament. Under this scenario, a live possibility, Pesutto would be forced out and a byelection called for his marginal state seat of Hawthorn.

Keen to avoid this, Liberal elders got involved.

Moira Deeming re-entering the party room on December 27 last year.Credit: Luis Enrique Ascui

NSW property developer Hilton Grugeon helped bankroll Deeming’s legal costs through a personal loan she declared on her register of interests in the Victorian parliament.

One scenario pursued in backroom negotiations was whether Grugeon, a long-time Liberal donor, could forgive Deeming’s debt for the good of the Liberal Party so that Pesutto could, theoretically, wear less of her costs.

Ten sources not authorised to speak publicly told The Age that Abbott, the former prime minister who publicly backed Deeming, was involved in making these representations to Grugeon. Sources closest to the talks said direct approaches were never made.

There was a perception that Grugeon could agree if Deeming could be convinced.

But Grugeon said he was not interested in bailing out Pesutto or the party he has long donated to, but which he now viewed as a disgrace.

“If this blows up in their face and costs them the next election, so be it,” Grugeon told The Age on Thursday. “The whole thing could go away within 24 hours if the people involved would face reality.”

He claimed Deeming was being unfairly pressured to cave after winning the case.

“To be continuing the bullying and harassment after her emphatic victory in the defamation suit is appalling,” Grugeon said.

“Remember, all it takes for evil to flourish is for good men to do nothing.”

He did not expect to be refunded had Deeming lost the case and said he had offered Deeming a blank cheque to pursue Pesutto, and those who supported him, to recover costs – including to the point of bankruptcy if necessary.

Party figures have also explored other avenues, but Kennett had no luck last week informally tapping the Cormack Foundation, the Liberal Party’s nominated entity that helps fund its campaigns.

Whether Pesutto can muster enough support from another donor is not out of the question.

Kennett, who publicly backed Pesutto through the trial, sounded the alarm internally that the Liberal Party could lose Hawthorn if it went to a byelection. Pesutto lost the seat to Labor in the 2018 “Danslide” but won it back with a 1.7 per cent margin in 2022 in a three-cornered contest.

Several Liberals suggested Hawthorn would be easily lost if this came to pass; the Victorian branch of the party would again look like a basket case, and Pesutto is locally popular.

A Deeming supporter laughed off the idea the Liberals could lose Hawthorn at a byelection without Pesutto. He lost the case and lawyers needed to be paid, they said.

But the idea any of this warring could disrupt the upcoming federal election campaign, in which Victoria is a target state, was particularly concerning for some party figures. Federal Opposition Leader Peter Dutton’s office was looped into negotiations.

And new state Opposition Leader Brad Battin, who rolled Pesutto in the days after Christmas, did not want to see his predecessor destroyed.

Despite her return to the party room in December after a year and a half in exile, Deeming’s relationship with the parliamentary team is still strained. She was the only Liberal MP not to attend a party conference on Tuesday.

Submissions to the Federal Court on costs are due Friday.

Brad Battin on the day his party room elected him new leader.Credit: Eddie Jim

Pesutto’s team is seeking more specifics on what legal work was invoiced for, questioning whether costs had been unnecessarily high.

They also want the full terms of Grugeon’s loan and the total value of all of Deeming’s crowdfunding, to argue that this should be shaved off Pesutto’s bill because Deeming is not entitled to make a profit beyond damages.

Deeming’s team argued the request for crowdfunding details was premature.

She also declared Grugeon had given her flights, a hotel stay and car hire in the most recent reporting period from July 1 to the end of January.

Grugeon was interviewed by the NSW Independent Commission Against Corruption as part of the Operation Spicer investigation, which in 2016 found he intended to evade the state’s donation laws in the lead-up to the 2011 state election. The member of the Order of Australia was not found to have acted corruptly.

Pesutto, in his updated register of interest, last week declared support from property developer Jason Yeap, former staffer Xavier Boffa and company Gillelosa Pty Ltd – established by Charles Gillies, the chair of Enterprise Victoria, the state Liberal Party’s business and professional engagement forum. Gillies told The Age: “John’s a thoroughly decent man doing a very difficult job who deserves support.”

Shadow ministers Georgie Crozier and David Southwick, who formed part of Pesutto’s since-disbanded leadership team, and former MP and Children’s Cancer Foundation chief executive Margaret Fitzherbert, also made contributions.

Deeming, Pesutto, Battin’s office and Kennett declined to comment. Dutton’s office and Abbott did not respond.

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