A Federal Court decision ordering John Pesutto to pay $2.3 million in legal costs to former colleague Moira Deeming has placed the former Victorian Liberal leader on the brink of bankruptcy and ignited fears of a by-election in his marginal seat of Hawthorn.

Senior National Judicial Registrar Alison Legge ruled that Pesutto must pay $2,308,873 in legal fees to Deeming after he was found to have defamed her during an attempt to expel her from the parliamentary Liberal Party. He had already paid $300,000 in damages following last year’s judgment by Justice Michael O’Callaghan.

Justice O’Callaghan determined that Pesutto made defamatory imputations in five publications, stating Deeming had proven each one “has caused, or is likely to cause, serious harm to her reputation.” The dispute stemmed from her attendance at a Let Women Speak rally in March 2023, which was gatecrashed by neo-Nazis.

Poetic justice pic.twitter.com/nZ2ruE2Fhm

— Avi Yemini (@OzraeliAvi) May 16, 2025

According to sources close to Pesutto, he has struggled to raise the funds needed to cover the legal bill and faces likely bankruptcy without external financial support. Bankruptcy would make him ineligible to remain in Parliament and would trigger a by-election in Hawthorn, which he holds by a slim 3.4 per cent margin.

The Liberal Party is concerned the seat could be lost to a strong independent or Labor candidate due to shifting demographics and recent federal election trends.

A private fundraising effort has so far raised approximately $500,000 and a crowd-funding page is expected to launch following the ruling. The Herald Sun reported Pesutto has approached the Liberal Party’s investment arm, the Cormack Foundation, seeking financial assistance.

Opposition Leader Brad Battin denied any active planning for a by-election. “I haven’t had conversations about it because I haven’t got to that stage,” he said. “It’s a bit early to pre-empt this.” He added, “I would like to see John there in November 2026.”

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