Ousted state Liberal leader John Pesutto has been ordered to pay $2.3 million in costs after he was found to have defamed first-term MP Moira Deeming.

“It is uncontroversial that the purpose of a cost order is not to punish the unsuccessful party,” Legge said.

“The purpose, no more and no less, is to compensate the successful party for the cost she has reasonably or not unreasonably incurred in the proceeding.

“I have determined that monies gifted or lent to Ms Deeming to assist her to meet her legal costs of the proceeding are not relevant to my determination and neither displace nor offset the quantum of her entitlement to costs.”

In December, Federal Court Justice David O’Callaghan found Pesutto had defamed Deeming by implying she was associated with neo-Nazis who gatecrashed a controversial Melbourne rally she attended.

He ordered Pesutto pay her $315,000 on top of her legal costs for the case, which Ms Legge calculated to be $2,308,873,11.

The scale of the costs ruling raises questions about the Hawthorn MP’s ability to fulfil the order and MPs’ eligibility to sit in Victorian parliament if they declare bankruptcy.

Pesutto’s barrister Daryl Williams KC sought a stay of 21 or 28 days on his client paying the lump sum to allow him to consider a review of the registrar’s decision.

Deeming’s barrister Sue Chrysanthou SC opposed the move, with the court expected to return on this afternoon to deal with the issue.

The Herald Sun reports Pesutto has been in discussions with the Cormack Foundation, a multimillion-dollar investment group for the Liberal Party, to cover his legal costs.

After losing the defamation trial, Pesutto lost the leadership in a spill and Deeming was welcomed back to the party room.

His replacement Brad Battin indicated the party wasn’t preparing for a by-election in Hawthorn and said it was up to the secretariat to decide whether to bail out Pesutto.

“We don’t need a candidate at the moment,” the state opposition leader told ABC Radio Melbourne.

“We’ve got John Pesutto, who is the member for Hawthorn, and if everything goes in a direction I would like to see John Pesutto will be there at the next state election.

“But we’ll keep those conversations internal – people aren’t interested in what’s happening inside the Liberal Party.”

Battin sparked internal backlash in April when he promoted Deeming to become his “representative to the western suburbs” amid her continued legal battle with Pesutto.