An internal Liberal party fight over a million-dollar loan to its former leader will spill into an election year after a push to throw out the case was dismissed.
Victorian Liberals administration committee member Colleen Harkin had launched a Supreme Court challenge against a loan to John Pesutto in June.
Mr Pesutto had been ordered to pay $2.3 million in legal costs to fellow Liberal MP Moira Deeming after the Federal Court found he defamed her by implying she was associated with neo-Nazis.
He paid $315,000 in damages and raised about $750,000 through wealthy backers and a GoFundMe campaign but faced bankruptcy after he was $1.55 million short.
The state Liberals' administrative committee in June agreed to loan Mr Pesutto the $1.55 million, but Ms Harkin and four other committee members sought to block the payment over an alleged breach of party rules.
Justice Andrew Keogh on Thursday dismissed parts of Ms Harkin's statement of claim, but gave her an opportunity to re-plead her case ahead of the expected trial in March.
"What claim, if any, goes to trial will be determined in the context of any debate about the attempt to re-plead," he said.
The loan, which former opposition leader Brad Battin voted in favour of, must be repaid by Mr Pesutto at market-rate interest.
Mrs Deeming was expelled from the Liberal party room but welcomed back in December 2024 as Mr Pesutto lost the leadership.
She offered to defer some of Mr Pesutto's legal bill in exchange for her preselection, as well as an unreserved written apology from the party. Mr Pesutto was also offered a payment by a third party on the condition he not challenge the leadership over the life of the loan.
Both offers were rebuffed.
Victorians head to the polls on November 28. The incumbent Labor government has been in power for more than a decade.
