John Pesutto facing bankruptcy after order to pay $2.3 million in Moira Deeming’s legal fees

John Pesutto says he is determined to stay in parliament and hopes to fundraise enough money to avoid bankruptcy after the former Victorian opposition leader was ordered to pay $2.3 million of Liberal colleague Moira Deeming’s legal costs.

Pesutto needs to pay the amount in a lump sum or face bankruptcy proceedings, which would force his exit from parliament and a byelection in his marginal seat of Hawthorn. Former Liberal premiers Jeff Kennett and Ted Baillieu called on the party and the public to help Pesutto pay.

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

In a statement on Friday afternoon, Pesutto said he was taking time to review the court decision with family and advisers.

“I reiterate that I am determined to continue serving the people of my electorate of Hawthorn and the people of Victoria for as long as they will have me,” he said.

“I am grateful for the support I am receiving from the community and am hopeful with this support that I will be able to fulfil these obligations and continue serving the people of Victoria.”

The Federal Court in December ordered Pesutto to pay Deeming $315,000 in damages, as well as her legal bill, when he was found to have repeatedly defamed her by falsely implying she associated with neo-Nazis.

The court has since heard months of debate about how much of her costs he ought to pay.

Deeming’s team sought almost $2.4 million, but lawyers for Pesutto argued it should be closer to $1.8 million, partly because Deeming had crowdfunded her legal fight. They also questioned whether Deeming’s costs were unnecessarily high.

But registrar Alison Legge on Friday said funding given or loaned to Deeming was not relevant to her determination, and ordered Pesutto pay $2.309 million towards Deeming’s costs.

“The purpose of a cost order is not to punish the unsuccessful party,” Legge said. “The purpose, no more and no less, is to compensate the successful party with the cost she has reasonably or not unreasonably incurred in the proceeding.”

The figure – in addition to his own legal fees and the damages bill – puts Pesutto perilously close to bankruptcy, despite financial support from all living past Liberal premiers and party room colleagues, and ongoing attempts to find a donor or convince the party to step in.

As revealed by The Age in March, the Liberal Party and its associated entity the Cormack Foundation have so far not been convinced to help Pesutto pay the costs.

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

Kennett, who has publicly supported Pesutto and donated to his defence in the lead-up to the trial, told The Age on Friday it was incumbent on the Liberal Party and the community to step up and spare Pesutto from bankruptcy.

“The whole thing is very sad, terribly sad,” Kennett said. “I’ve never seen anything like it in my life.”

Moira Deeming after being readmitted to the Liberal party room on December 27.Credit: Luis Enrique Ascui

He said in government, mistakes were paid by the state.

“It is incumbent on the party and incumbent on those in the public with goodwill to step up quickly,” he said.

“I am very hopeful now that people of goodwill in the community, and there are many of them, can see it would be so wrong for John Pesutto to be bankrupted … The reality is, if you bankrupt Mr Pesutto, there’s a precedent being set now, which is just frightening.”

Kennett said he could have been in “all sorts of trouble” for some of the things he said during his time in opposition.

Baillieu, who also donated to Pesutto’s defence, encouraged anyone who wants a strong opposition and alternative government to support the ousted opposition leader.

“That’s what I’ll be doing,” Baillieu told The Age.

“John is one of the most capable people in parliament. He is one of the most capable people in the party. We’ve got to do whatever we can to help him meet these obligations and keep him in parliament.”

He said he thought it would be “wise” for the party to step in.

“No one wants a byelection. People in Hawthorn don’t want a byelection, people in the party don’t want a byelection, Victorians don’t want a byelection,” Baillieu said.

“Byelections cost a lot.”

Party figures have put the cost of defending Hawthorn at up to $500,000. Liberal figures have raised the alarm that Hawthorn could be easily lost if a byelection were called.

Pesutto lost the seat to Labor in the 2018 “Danslide” victory by then-premier Daniel Andrews, but won it back with a 1.7 per cent margin in 2022 in a three-cornered contest.

Pesutto’s friends and supporters on Friday launched a crowdfunding campaign to prevent the “worst-case scenario”.

“JP has always been there for us, so now we are here for him.”

Daryl Williams, KC, acting for Pesutto, flagged that he may request more time so he can consider whether to appeal the costs decision.

High-profile barrister Sue Chrysanthou, SC, acting for Deeming, also flagged the possibility that cost orders could be made against third parties who financially supported Pesutto to recover the fees.

Opposition Leader Brad Battin, who overthrew Pesutto just after Christmas, said he hoped the MP for Hawthorn would remain in parliament but would not comment on any conversations he was having to preserve his predecessor’s position.

“I would like to see John there in November 2026,” Battin said.

Opposition Leader Brad Battin.Credit: Chris Hopkins

“Any conversations I have with any of the Liberal Party organisations will remain confidential.”

He said he had not had any conversations about a possible byelection, and said that scenario was a “hypothetical”.

Asked about the difficulties leading a party room in which an MP could bankrupt another, who defamed the first, Battin said: “Life is full of challenges.”

Battin would not say whether he had spoken to Deeming following the costs order.

Deeming has declined to comment.

NSW developer Hilton Grugeon, who bankrolled Deeming’s case, told The Age in March he was not interested in bailing out Pesutto or the party he has long donated to, which he now views as a disgrace. Deeming would not have repaid the loan from Grugeon had she lost the case under the terms of their verbal agreement.

Pesutto lost the defamation case in December and was taken down in a spill weeks later, on the same day Deeming was returned to the Liberal party room.

Deeming was expelled from the parliamentary team in May 2023 and sat on the crossbench before her return in December.

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