A legal challenge to overturn a controversial $1.55 million loan made to former Victorian Liberal leader John Pesutto is now expected to extend well into 2026, casting a long shadow over the party’s election prospects.
Five members of the Victorian Liberal Party’s administrative committee have taken Supreme Court action against 18 defendants, including party president Phil Davis and current Opposition Leader Brad Battin. They allege the loan breached party rules and seek to have it reversed—a move that could reignite bankruptcy proceedings against Pesutto.
The loan was granted in June to help Pesutto pay a $2.3 million settlement to former MP Moira Deeming after a defamation dispute arising from his failed attempt to expel her from the party room in 2023.
The case, originally scheduled for a hearing this week, has now been delayed. Mediation is set for mid-September, with a report due back to court by September 19. If no settlement is reached, the dispute may go to trial, potentially stretching into next year, further destabilising the party’s fragile unity.
Deeming, herself named as a defendant, could be ordered to repay the funds. Such an outcome would trigger fresh bankruptcy threats for Pesutto, whose political career was salvaged by the loan.
The fallout has further exposed divisions within the Liberals. While some hoped the loan would put the long-running saga to rest, internal critics argue it has only inflamed factional tensions and undermined public confidence.
Brad Battin, who replaced Pesutto as leader in December, has admitted the saga continues to distract from the opposition’s core work. The controversy is also feeding into dismal polling. A new Redbridge poll shows the Coalition’s primary vote has plummeted to 38%—five points below when Battin took the reins.
Labor now leads 51.5 to 48.5 on a two-party preferred basis, erasing earlier gains by the Coalition. The Liberals have lost support across all key demographics, including women, tertiary-educated voters, migrants, and suburban constituents. Only regional Victoria shows any sign of gains, possibly linked to opposition campaigning against the new emergency services levy.
Critics say the party’s post-Pesutto leadership has failed to establish a clear policy agenda, causing voter support to stall. With the next state election less than 18 months away, some insiders warn the party risks losing a fourth consecutive contest and potentially remaining in opposition until 2030—marking two decades since their last victory.
