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Former opposition leader John Pesutto and his supporters are quietly exploring whether he can refinance his $1.55 million loan to stop the long-running saga dragging the Liberal Party through a Supreme Court trial in an election year.
The possibility has not progressed to any specific proposal but has been loosely discussed outside mediation, The Age confirmed with four party sources unable to speak publicly.
John Pesutto after losing the leadership in December.Credit: Luis Enrique Ascui
The Hawthorn MP narrowly avoided bankruptcy – which would have forced him out of parliament and triggered a byelection in his marginal seat – after the Federal Court found he repeatedly defamed his colleague Moira Deeming and ordered he pay $2.3 million of her legal costs.
Pesutto crowdsourced about one-third of the bill, having already paid $315,000 in damages. To meet the rest of the costs, the party’s state executive in June approved a $1.55 million loan from its investment vehicle, Vapold, with the false hope of ending the years-long saga.
Interest was set at a variable home loan rate, according to court documents.
But five members of the administrative committee – Colleen Harkin, Erin Hunt, Anthony Schneider, Ian Pugh and Marcus Li – are challenging the legitimacy of the loan in the Supreme Court, arguing it would constitute a “benefit” in breach of the party’s constitution. They say the decision lacked proper process and transparency, which the party rejects.
Moira Deeming outside a December Liberal party room meeting.Credit: Eddie Jim
The aggrieved members were this week joined by a sixth: former Victorian Liberal Party president Greg Mirabella, who vocally opposed bailing out Pesutto through a loan at the June meeting and unsuccessfully challenged current president Philip Davis at last month’s state council.
They are suing the rest of the Victorian Liberal Party’s state executive as well as the directors of Vapold.
Parties sat down for mediation on Tuesday.
The Supreme Court has set aside five days for a trial in March 2026, an election year, if they can’t resolve the dispute in mediation. March will be three years since Pesutto repeatedly defamed Deeming in the months after the 2022 election.
To avoid this scenario, The Age has confirmed that Pesutto, his supporters and party figures have discussed refinancing the loan in the hope of bringing the case to an end.
While they are continuing to explore the possibility, it has not advanced to any specific proposal. If it does progress, it could entail a loan from a party donor instead, for example.
Refinancing would allow Pesutto to repay his debt to Vapold. His backers hoped this would satisfy the plaintiffs or the court that there was no purpose in the lawsuit continuing.
They said the ongoing litigation could galvanise more financial support from Victorians sick of the distraction derailing the Victorian Liberals.
Internal supporters doubted the court challenge would succeed in any case, but viewed the ongoing damage to the party as untenable.
Others dispute that characterisation, suggesting Pesutto’s allies had been forced to weasel their way out once the loan came under scrutiny. Two party sources who opposed the loan suggested refinancing would not satisfy them because it would not resolve their concerns with the process.
The state Liberals are on track for a fourth consecutive election loss if the fractured party can’t gain ground.
Davis – when he was re-elected state party president last month – declared the opposition would never win government if members couldn’t put grievances aside and has described the Supreme Court proceedings as “a gift to our political opponents”.
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