Ms Deeming launched court action against the party leader over comments he made about her attending a March 2023 rally outside state parliament that was gatecrashed by a group of masked men who performed the Nazi salute.
On the first day of the trial, it was revealed a 70-minute audio recording of a key meeting between senior Liberals and Ms Deeming after the rally had unexpectedly emerged one week before the case kicked off.
Ms Deeming's barrister Sue Chrysanthou SC claims the recording contradicts Mr Pesutto's previous evidence and alleged he did not tell his lawyers about it, despite knowing it existed since at least December 2023.
"Knowing there was a recording and not mention it, not provide it to his lawyers, it's very strange conduct," Ms Chrysanthou told the Federal Court on Monday.
The recording, held by Senior Liberal MP David Southwick, is set to be played in court on Tuesday.
Federal Court Justice David O'Callaghan is considering whether to grant an application to subpoena any other recordings or other relevant documents Mr Southwick may have.
High-profile Liberals set to give evidence over the three-week trial include federal Senator Sarah Henderson, Mr Southwick, current Victorian Liberal MP Renee Heath and former MP Matt Bach who is flying in from his new home in the United Kingdom.
John Pesutto is defending the defamation action brought by Expelled Liberal MP Moira Deeming. (Con Chronis/AAP PHOTOS)
On Monday, a diagram submitted to the court showed there were at least five distinct demonstrations supporting various causes around parliament on the day of the Let Women Speak Rally.
Ms Chrysanthou said her client did not see anyone performing a Nazi salute until a group of men, who had nothing to with the rally Ms Deeming attended, were removed by police.
She claimed Mr Pesutto went on "quite the roadshow to defame my client" in media interviews afterwards and Ms Deeming previously had such a good reputation that she was chosen to be party whip.
Mr Pesutto has denied wrongdoing and his barrister Matt Collins KC is yet to address the court at length over the case.
Ms Deeming has sat in parliament as an independent MP since she was expelled from the Liberal party room in May 2023.
Mr Pesutto previously reached settlements with rally speaker Kellie-Jay Keen and organiser Angela Jones, issuing both women a public apology.
Mediation between him and Ms Deeming broke down after the former Liberal MP demanded to return to the party room without conditions.
10°C