A legal application to stop the Victorian Liberal party’s loan of $1.5m to its former leader John Pesutto has been strongly criticised by a supreme court judge, who accused lawyers of lodging a “half-baked” injunction with “a remarkable oversight” that wasted the court’s time.
The loan, to help cover $2.3m in legal costs owed to Pesutto’s colleague Moira Deeming, was approved by the Victorian Liberal party’s 19-person administrative committee late last week.
Two separate payments were made to Deeming’s lawyers on Thursday morning to ensure Pesutto avoids bankruptcy and a byelection in his seat of Hawthorn.
But lawyers acting on behalf of one member of the Victorian Liberals’ administrative wing, Colleen Harkin, lodged an urgent injunction application in the supreme court to stop the loan from being transferred. The matter was heard after the money had been sent.
An originating motion, filed in the supreme court by Harkin and seen by Guardian Australia, asked for an injunction “restraining” the directors of the party’s finance vehicle, Vapold, from transferring “the amount of $1,550,000.00 belonging to the Liberal party” to either Pesutto or Deeming.
In a letter sent on Wednesday to Vapold’s directors, seen by Guardian Australia, lawyers for Harkin argued the loan breached the Liberal party’s constitution and claimed committee members were not given adequate notice or sufficient details about it, either before or during last Thursday’s meeting where a vote to approve it occurred.
• Sign up for Guardian Australia’s breaking news email
But Justice Michael McDonald said the application would not “get off the runway” until each member of the administrative committee had been served as defendants in proceedings.
“It’s quite a remarkable oversight, if I may say so,” McDonald said.
“I’m not going to make any orders in this matter until you get your house in order,” McDonald said. “You have come to this court half baked. You’ve failed to name the proper defendants. It doesn’t get much worse.”
McDonald said out-of-hours hearings were reserved for urgent matters and that this injunction did not qualify as such, given the loan had already been processed and the funds were in Deeming’s lawyer’s account. “The reality is, those moneys … will not leave that account without Ms Deeming’s say-so.”
The matter has been deferred until 4 July with the costs of the four respondents, Vapold Pty Ltd, Alan Stockdale, Karyn Sobels and Christopher Pearce, to be covered by the applicants. Sobels, who is overseas, is also a member of the Liberal party’s administrative committee.
Last month, the federal court ordered Pesutto to pay $2,308,873 of Deeming’s legal costs after it found in December that he repeatedly defamed the upper house MP by falsely implying she sympathised with neo-Nazis and white supremacists.
The costs were in addition to $300,000 in damages and $15,000 in interest Pesutto paid after the federal court judgment, after which he lost the leadership of the party.
The loan, which has several strict conditions, will see Pesutto repay about $10,000 a month and could reap the party $1m in interest by the time it is repaid.
After the loan’s approval, Pesutto’s successor as opposition leader, Brad Battin, said it would “avoid further financial and reputational damage” for the party and also declared the matter – which has dragged on since March 2023 – resolved.
The payment of Pesutto’s debt comes a day before there was expected to be an escalation in bankruptcy proceedings against him, which were initiated by Deeming earlier this month.
Bankruptcy would have disqualified Pesutto from parliament and triggered a byelection in his seat of Hawthorn, which the Liberals hold by a slim margin of 1.74%.
Avoiding a costly byelection and potential loss of the seat was a key reason many within the party backed the move to bail the MP out with a loan.
On the loan, the former Victorian opposition leader Matthew Guy said the “issue’s been put to bed. The admin committee put it to bed last week.
“If some people want to … hark on about something that’s, I understand, concluded – let them … because we’ve got a job to do and that is to defeat the Labor government.”
Deeming, Pesutto, Harkin and Battin have been approached for comment.
