Independent Oliver Yates has threatened to take the Liberal party to the court of disputed returns over Chinese language signs, designed to resemble Australian Electoral Commission material, that directed people to vote Liberal.

Labor also complained about the signs, which appeared at polling places on election day in electorates including Chisholm, a marginal Liberal seat, and Kooyong, where Yates ran against the treasurer, Josh Frydenberg.

The signs, using the purple and white AEC colours, told voters “the correct voting method” was to put a “1” next to the Liberal candidate and then number the rest of the boxes from lowest to highest.

Oliver Yates, who ran as an independent in the seat of Kooyong against the treasurer, Josh Frydenberg. Photograph: The Guardian

Fine print at the bottom of the signs said they were authorised by Simon Frost for the Liberal party’s Victoria division.

On Saturday, the AEC advised Labor and Yates it would not take action because the signs were authorised and there were no rules regarding the use of colour in campaign signage.

Advice by Marque Lawyers managing partner Michael Bradley, for Yates, argues the signs breach section 329 of the Electoral Act, because they are “misleading or deceptive”.

The AEC relied on the high court’s interpretation that the ban “concerns conduct which affects the process of casting a vote rather than the formation of the political judgment”.

But Yates’s lawyer has written to the AEC warning that the signs were an “emphatic direction on how to vote” without “permissive language to indicate choice” and were therefore “not directed to the formation of the judgment”.

“The colour of the corflute and absence of any party logos or branding make it appear to be an official AEC poster,” Bradley said. “There is a very real risk the reader would think they are being told by the AEC that, to record a valid vote, they must vote 1 for Liberal.

“That risk is indisputable.”

Bradley argued that anybody who was “not familiar with Australian electoral processes may not be aware that the AEC would never direct the order of the vote” and could therefore be deceived.

“The fact that it was in Chinese language, and therefore clearly directed to a specific minority group of voters with a higher than average likelihood of having poor English language skills, and a higher than average likelihood of having a poor understanding of the voting process, is highly relevant.”

Bradley urged the AEC not to declare the result of the Kooyong and to urgently reconsider whether the sign was in breach of the law “to avoid an approach to the court of disputed returns in relation to this matter”. The AEC has rejected the demands, because it does not believe the signs breach the law.

Yates told Guardian Australia it was “extraordinary” that misleading and deceptive conduct was accepted as the “trade craft” of politics.

“I stood on a platform of political integrity and this is the most appalling thing I’ve seen in my working life,” he said.

Yates said Marque intends to pursue the matter in the court of disputed returns on his behalf and he will refer it to the Office of the Director of Public Prosecutions.

“It’s irrelevant to my electoral result … but from the point of view of political integrity there is a principle at stake.”

Former AEC official Michael Maley said use of the colour purple “is not a breach” of electoral law but the case would depend on the precise translation of the Chinese text.

“If the implication is there is only one formal way to vote, that is in all probability highly shocking,” he said.

Guardian Australia understands Labor has not considered further avenues of appeal or sought legal advice, as it is waiting for the count to be finalised in Chisholm.

But Labor believes the signs may breach the new offence of impersonating a commonwealth body, a law passed in the last parliament to address Coalition outrage about Labor text messages before the 2016 poll warning voters that “time is running out to save Medicare”.

Yates said he would seek legal advice on that offence, suggesting that Liberal mailouts to help voters complete postal vote applications – which harvest voter information before they are then forwarded to the AEC – had also confused voters who believed they were from the AEC.

Labor’s Jennifer Yang is currently behind by 963 votes in the battle for Chisholm against Liberal Gladys Liu.

Yates won a primary vote of 9.8% in Kooyong, a seat Frydenberg is set to hold with a primary vote of 49%.