A senior Victorian Liberal Party figure has admitted in court that Chinese-language signs used in May's federal election in two Melbourne seats were designed to convey the appearance of official electoral commission material.

Key points: A court heard the signs were intended to encourage voters to preference the Liberal Party first

A court heard the signs were intended to encourage voters to preference the Liberal Party first Simon Frost conceded they were designed to use similar colours to the AEC

Simon Frost conceded they were designed to use similar colours to the AEC The case is seeking to have the election results in Kooyong and Chisholm thrown out

The Court of Disputed Returns — sitting in the Federal Court in Melbourne for the next three days — is being asked to unseat Treasurer Josh Frydenberg and his Victorian Liberal colleague Gladys Liu for allegedly misleading voters during the election.

The case centres on election signs, known as corflutes, which resembled official signs from the Australian Electoral Commission (AEC) and told voters in Chinese script to give their first preference to the Liberal candidates.

The signs were posted at 13 polling stations in Mr Frydenberg's seat of Kooyong and at 29 polling booths in nearby Chisholm, which was won by Ms Liu.

Gladys Liu became the first Chinese-Australian woman to be elected to the House of Representatives. ( ABC News: Luke Stephenson )

They were authorised by the Liberal Party and the party's then-acting Victorian director, Simon Frost.

During evidence in the Federal Court on Wednesday, Mr Frost admitted the signs did not have Liberal party logos, and were in the colours white and purple, like the colour scheme used by the AEC.

The unsuccessful independent candidate for Kooyong, Oliver Yates, and Chisholm voter Vanessa Garbett have taken the case to court.

Their lawyer, Lisa De Ferrari, cross-examined Mr Frost, who is now a senior advisor to Mr Frydenberg.

"You intended to convey that it was an AEC corflute didn't you," Ms De Ferrari said. "It was similar to the AEC colours, yes," Mr Frost replied. "That is a yes then?" she asked. "Yes," he replied.

The signs, which were posted during the pre-poll in April and on polling day on May 18, said: "Correct voting method. On the green paper ballot put a '1' next to the Liberal Party candidate."

Court documents showed there were several versions of the corflutes instructing voters in Chinese of "the right way to vote" or "the correct way to vote".

Those versions also told electors to put a "1" by the Liberal candidate's name.

Mr Frost told the Federal Court the signs that were used were not what he approved.

While he knew of concerns about the translations early on election day, the court heard he did not act because he thought it was just political point-scoring by opponents.

The case has asked the court to void the election results in Kooyong and Chisholm, and rule that Mr Frydenberg and Ms Liu were not elected.

"The corflutes were likely to mislead an elector who was able to read Chinese characters into thinking that the AEC was … instructing electors that in order to cast a valid vote, they were required to place the number 1 … next to the Liberal Party candidate," the court documents stated.

Labor officials lodged complaints with the AEC over the posters on election day. ( ABC News: Gemma Hall )

Ms Liu defeated Labor's Jennifer Yang in the seat of Chisholm by 1,090 votes on a two-party preferred basis — 48,005 votes to 46,915.

Ms Liu was born in Hong Kong and is fluent in Mandarin.

Her victory in Chisholm made her the first female Chinese-Australian member of the Federal Parliament.

In the seat of Chisholm, one in five residents claims Chinese ancestry and more than a quarter of the population speak Mandarin or Cantonese.

Ms Garbett's lawyers have argued the signs made a difference in the electorate where Chinese voters are growing in number, a point Ms Liu's legal team rejected.

Case relies on 'nuance' of English translations, court told

While Mr Frydenberg won his seat easily — 55,159 compared to 43,870 votes for Greens candidate Julian Burnside — he did not win on first preferences.

Mr Yates argued the corflutes caused voters to direct their first and other preferences "in a way that they otherwise would not have done," a claim Mr Frydenberg has rejected.

Josh Frydenberg has represented the seat of Kooyong since 2010. ( ABC News: Jed Cooper )

The case is being heard by Justice James Allsop, Justice Anthony Besanko and Justice Andrew Greenwood, who have been shown examples of the signs in court.

Ms De Ferrari showed the justices the signs and a real AEC banner.

Neither Mr Frydenberg nor Ms Liu were in court for Monday's hearing.

Court documents revealed both Mr Frydenberg and Ms Liu say Mr Frost authorised the signs and in fact "intended" the translation to say: "To make your vote count, put a '1' next to the Liberal Party candidate."

"Mr Frost did not set out to mislead any voter," both Mr Frydenberg and Ms Liu said in separate court documents.

"Rather, Mr Frost sought to explain to voters who could read Chinese and who were considering voting for the Liberal Party how to do so in a valid way, and also to encourage voters, who had not yet made up their mind, to vote for the Liberal Party."

Justice Allsop noted the case relied on the "nuance" of English translations of the signs.

Both MPs said they were aware the corflutes were being used, but that they were not the "same" colour scheme as the AEC material, but rather were a "similar" colour scheme.

Ms Liu's lawyers also argued the section of the law on which Ms Garbett based her case "is not to be construed from the perspective of the naive or the gullible".

But if it were, "it cannot be countenanced that even a gullible elector reading the corflute would think, having already formed the judgement to vote against the Liberal Party, that she or he must nevertheless put a '1' next to the Liberal Party candidate."

Electoral authority defends its response

The AEC has been accused of failing to respond to complaints on polling day.

In its response to the claims, the AEC said Ms Garbett failed to say how the corflutes affected the election outcome.

It acknowledged, however, that Chisholm did have a higher percentage of Mandarin and Cantonese-speaking and reading voters.

The case was brought by Oliver Yates, the independent candidate in Kooyong. ( ABC News: Karen Percy )

"It does not follow that the corflutes likely caused such residents … to vote for Ms Liu … when they had previously had no intention to vote for a candidate endorsed by the Liberal Party," the AEC's submission said.

"There is … no small incongruity in the notion that an Australian citizen, with even a modicum of familiarity with the country's democratic tradition, could be misled into thinking that one could only validly cast a vote if one voted for a particular political party."

The AEC argued that would apply particularly to Chinese voters who were also able to read English.

The case against Ms Liu was initiated by another person who withdrew their application in September, citing concerns about personal safety and retaliation.

Outside court, Mr Yates said he only launched the legal action due to the AEC's failure to address the issue.

"The AEC's meant to have the job of ensuring that we have fair and true and honest disclosure at election time, [they've] failed dismally and we as citizens should not have to run these cases, but we're forced to," he said.

Mr Frydenberg said it would be inappropriate to comment while the matter was before the court.