Ms Deeming launched court action against the Liberal leader over comments he made about her attending a 2023 rally that was gatecrashed by a group of masked men who performed the Nazi salute.
Several Liberal politicians will give evidence in the three-week trial including federal Senator Sarah Henderson, current Victorian Liberal MP Renee Heath and former MP Matt Bach who is flying in from the UK to address the court.
On Monday at the start of the trial, Ms Deeming's barrister Sue Chrysanthou SC said Mr Pesutto went on a "campaign of destruction" against her client who had a good reputation before "he tarred her with the Nazi brush".
She claimed an audio recording that contradicts Mr Pesutto's evidence about what happened in a key meeting between the party's senior leadership and Ms Deeming emerged one week before the trial started.
She alleged Mr Pesutto, who is a defamation lawyer, did not tell his lawyers that senior Liberal David Southwick had a recording of the key meeting.
"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.
Multiple text messages and emails between Liberal staffers and politicians were read out in court, including from Mr Pesutto's chief of staff Louise Staley who said he should "consider expelling" Ms Deeming on the evening of the rally.
Moira Deeming's barrister Sue Chrysanthou said John Pesutto's conduct over a recording was strange. (Con Chronis/AAP PHOTOS)
The independent MP arrived at court flanked by her legal team, including Ms Chrysanthou who previously represented broadcaster Lisa Wilkinson in Bruce Lehrmann's case against Network Ten.
Mr Pesutto arrived holding hands with his wife, Betty, along with with his barrister Matt Collins KC, who represented Network Ten in the same civil case earlier in the year.
Ms Deeming was initially suspended then expelled from the Liberal Party before becoming an independent in parliament.
Mediation between her and Mr Pesutto broke down in 2023 over the former Liberal MP's demand to return to the party room without conditions.
Mr Pesutto denies wrongdoing and previously reached settlements with rally speaker Kellie-Jay Keen and organiser Angela Jones, issuing both women a public apology.
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