Victorian Liberal leader John Pesutto will fight any defamation action brought by Moira Deeming after the controversial MP was expelled from the parliamentary party.
In a two-hour special meeting at state parliament on Friday morning, Liberal MPs voted 19 to 11 to expel Ms Deeming for "bringing discredit" to the party.
She sparked controversy when she attended an anti-transgender rights rally where neo-Nazis performed the 'heil Hitler' salute.
The upper house MP was a no-show on Friday after her lawyers served Mr Pesutto a defamation concerns notice.
They warned of court action if Mr Pesutto did not immediately withdraw the expulsion motion, publish an apology on his website and pay Ms Deeming compensation and legal costs.
Mr Pesutto said he would not deign to any of the demands listed in the document.
"I'll obviously instruct my lawyers to do what's necessary in order to vigorously defend the action," he told reporters.
The Liberal leader, who took over after November's state election drubbing, has discussed how he will fund his legal defence with party officials but only confirmed publicly that taxpayers would not foot the bill.
Mr Pesutto was far from explicit on the grounds for Ms Deeming's expulsion, arguing it was self-evident and on the public record.
But the Hawthorn MP suggested Ms Deeming's legal threat did not sit well with members of the party room.
"What's happened today and in recent weeks has nothing to do with whether somebody is conservative or progressive," Mr Pesutto said amid the factional infighting.
"It is all about: are we a united, disciplined and focused team?"
He hailed Ms Deeming's expulsion as a turning point and reaffirmed his commitment to turn the state party into an inclusive and welcoming party before the 2026 state election.
While more than one-third of his colleagues voted against the motion, Mr Pesutto described it as a "strong endorsement" and said he would be "breaking bread" with the 11 dissenters.
Liberal frontbencher James Newbury, one of five Liberal MPs to sign the motion, said Ms Deeming could not sue her boss and expect to keep her job.
"Suing your party and leader is a gross act of betrayal," he said.
Ms Deeming still remains a rank-and-file member of the Victorian Liberals but the administrative wing is considering expelling her from the wider party.
Either way she will permanently sit on the cross bench.
A lone supporter of Ms Deeming wearing a blue Liberal T-shirt was spotted on the steps of parliament before the vote, drawing gratitude from the absent MP.
"He might have missed the memo that I wasn't going to be there," she tweeted.
Renee Heath, the upper house MP responsible for taking disputed minutes from March's meeting to expel Ms Deeming, was removed as partyroom secretary after a separate motion.
Fellow rookie MP Trung Luu was appointed as her replacement.
Mr Pesutto said MPs "lost confidence" in Ms Heath's performance in the role but he maintained she still has a future in the party.
It marked the second time the Liberal party room met to consider expelling Ms Deeming after she attended a Melbourne anti-transgender rights rally where neo-Nazis performed the 'heil Hitler' salute.
The first motion, led by Mr Pesutto and supported by a 15-page dossier accusing the MP of protesting alongside people "known to be publicly associated with far right-wing extremist groups including neo-Nazi activists", failed to garner enough support.
A nine-month suspension was brokered before Ms Deeming last week demanded Mr Pesutto issue a media statement exonerating her of being a Nazi or Nazi sympathiser, as she claims was part of the settled terms, or face legal action.
Ms Deeming declined to comment, citing legal advice.