Ms Deeming gave evidence on Tuesday after the court was played a 70-minute recording of a meeting she was summoned to after attending a rally gatecrashed by men who did Nazi salutes.
She launched court action against Mr Pesutto over comments he made about her attending the rally in March 2023 outside state parliament.
Matthew Collins suggested Moira Deeming was well known for having controversial views. (Con Chronis/AAP PHOTOS)
She was suspended and later expelled from the party.
Mr Pesutto's barrister Matthew Collins KC cross-examined Ms Deeming when she took the stand on Tuesday.
He suggested Ms Deeming was well known for having controversial views and because of this, an earlier bid for pre-selection for a federal seat was thwarted.
She did not have the full support of the Liberal Party when she was preselected in Victoria, Mr Collins said, taking her to comments she made in 2016 that the Safe Schools Program was "sleazy unnecessary drivel".
The program helps schools foster a safe environment that is supportive and inclusive of LGBTIQA+ students.
Ms Deeming doubled down on her beliefs over the program on Tuesday, saying it removed basic child safety protocols, promoted high-risk sexual activities and allowed male teachers to supervise female change rooms.
"These programs are outrageous and this has nothing to do with bigotry or hate or extremism," Ms Deeming, a former high school teacher, told the Federal Court.
"The reason people call me controversial is because they don't know the program as well as I do."
Moira Deeming said the Safe Schools Program removed basic child safety protocols. (Con Chronis/AAP PHOTOS)
Earlier, secretly recorded audio of a meeting attended by Ms Deeming, Mr Pesutto, opposition leader in the upper house Georgie Crozier and deputy Liberal leader David Southwick was played to the court.
Then-deputy leader of the upper house Matt Bach and Mr Pesutto's then-chief of staff Rodrigo Pintos-Lopez were also in attendance.
The audio featured Ms Deeming being hauled over the coals for her involvement in the Let Women Speak rally as well as images of her having champagne afterwards with organisers, including anti-trans rights activist Kellie-Jay Keen-Minshull.
Ms Deeming is heard telling the leadership she had no idea Nazis were at the rally until police arrested them.
"Are you accusing me of actual Nazi links?" Ms Deeming asked Mr Pesutto.
"Very obviously, I am not a Nazi, and I don't support Nazis."
Her links to rally organiser Angela Jones, who tweeted "Nazis and women want to get rid of pedo filth, why don't you?" was also raised as problematic to the Liberal Party's ability to win the next state election.
Mr Pesutto said he was "getting clobbered" over Ms Deeming's involvement with the rally and in turn there would be a public perception the Liberals hated the LGBTIQ+ community.
John Pesutto told Moira Deeming he thought she should resign or he would take steps to expel her. (Con Chronis/AAP PHOTOS)
Mr Pesutto told Ms Deeming he had come to the meeting thinking there would be two outcomes: she resigned or he would take steps to expel her.
Ms Deeming's barrister Sue Chrysanthou SC told the court her client was ambushed and subjected to a "shocking" and prolonged attack during meeting.
She said Ms Deeming had already made concessions to denounce Nazism, among other things, but Mr Pesutto never intended to give her the opportunity.
Ms Deeming agreed to do everything asked of her, except disown her friends in totality, Ms Chrysanthou said.
At the end of the long meeting, Mr Pesutto flagged Ms Deeming's expulsion and suggested she could resign to save the party time and energy.
High-profile Liberals are set to give evidence over the three-week trial including federal Senator Sarah Henderson, Mr Southwick and former MP Matt Bach who is flying in from his new home in the United Kingdom.
Mr Pesutto has denied wrongdoing.
Ms Deeming has been an independent MP since she was expelled.
Mr Pesutto previously reached settlements with Ms Keen-Minshull and Ms Jones, issuing both a public apology.
The trial continues.
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