Victoria’s Liberal Party should be waging war against Jacinta Allan’s Labor government but has instead spent 18 months tearing itself apart in a struggle for party’s soul.

First-term MP Moira Deeming and party leader John Pesutto have been scrapping it out in the Federal Court for three weeks as part of a high-stakes defamation trial.

Deeming alleges Pesutto defamed her by suggesting or implying she was a Nazi or Nazi sympathiser following a Let Women Speak rally in Melbourne in March 2023, a claim he denies.

The controversial trans-critical event, which Deeming addressed and helped organise, was attended by neo-Nazis who performed the Nazi salute on the steps of state parliament.

It sparked public outroar, leading to her suspension and later expulsion from the parliamentary Liberals.

The unfolding trial has exposed deep rifts and a level of paranoia within the Liberal ranks, with a raft of current and former state MPs taking the stand to give evidence for and against their colleagues.

Deputy leader David Southwick, it emerged, secretly recorded a meeting a day after the rally in which Deeming was hauled over the coals.

During their 70-minute exchange, Pesutto sought an assurance from Deeming that nobody she worked with had “any sympathies … or liaisons with Nazi groups”.

“People think, rightly or wrongly, that we walk in lock step with Nazi protesters and Nazis and I’m getting clobbered,” he said in the recording.

Upper house party leader Georgie Crozier said she was “beyond furious” the party’s work to put the “worst government in the state’s history on the ropes” had “blown up”.

Deeming denied any knowledge of organisers having Nazi links and pointed out her uncle was a Holocaust survivor.

But Pesutto moved to expel her anyway, supported by a dossier of “evidence” distributed to Liberal colleagues and the media.

Southwick told the court he recorded the tense meeting because he could not trust Deeming and needed an “insurance policy”.

In a second secret recording aired in court on Thursday, Deeming claimed gay and transgender people were her “biggest fans” and denied having homophobic or transphobic views.

Retired Liberal MP Matt Bach, who was at the first meeting as a leadership team member, revealed former Victorian premier Ted Baillieu warned him it was common for Liberal Party meetings to be surreptitiously recorded.

Baillieu and fellow Victorian Liberal premiers Jeff Kennett and Denis Napthine have all chipped in to partly fund Pesutto’s high-powered defence, led by barrister Matthew Collins KC.

The trial had been due to end on Friday but more time is needed for closing submissions.

A judgment is likely to be months away and could then be appealed, potentially dragging out proceedings until 2025, when a federal election is due.

Pesutto promised reform in taking control of the state party in December 2022. He replaced Matthew Guy, who had led the Coalition to a second successive election drubbing.

Pesutto defeated Berwick MP Brad Battin by only one vote in the resulting leadership contest, showcasing a split between moderate and conservative members over the direction of the party.

The polls have tightened recently, with a RedBridge survey in August suggesting Labor and the Coalition were tied 50-50 on a two-party preferred basis.

It marked the first time the Coalition had been all square with Labor on TPP in Victoria since a Galaxy poll in December 2017.

Allan, who succeeded Daniel Andrews as leader 12 months ago, also commands only a one percentage point lead as preferred premier over Pesutto.

Three weeks of the civil war playing out in open court could dent the Liberals’ upward trajectory and appears to have some of Pesutto’s colleagues on edge.

Media speculation on his future flared this week, with anonymous Liberal MPs suggesting his leadership was untenable after four days of grilling from Deeming’s equally feted barrister Sue Chrysanthou SC.

The Hawthorn MP swatted away the scuttlebutt on his way into court on Tuesday, telling the swarming media pack no Liberal colleague had raised concerns with him.

“I’ve got no concerns in that area,” he said.

But the Victorian Liberals have form in plotting leadership spills, with Michael O’Brien toppled by Guy in September 2021 after an earlier failed coup by Battin.

The next Victorian state election is just a tick over two years away.

Barring a Labor implosion, the Victorian Liberals must present a united front to have a chance of winning the 17 seats they need to return to majority government and end 12 years in the political wilderness.

A viable alternative government cannot be at war with itself.

-AAP