There is now no end in sight to the row, with Victorian Liberal Party president Michael Kroger calling on Cormack's directors and shareholders to resign and relinquish control of the fund. "It is now our proposal to write to the Cormack directors asking them to acknowledge the decision of the court and resign as directors and shareholders," he said. But the foundation insisted the court confirmed its independence and said the matter should never have resulted in litigation. “The Liberal Party has completely failed to achieve its objective of confirming ownership or control of Cormack Foundation," it said. The legal action may yet continue with Mr Kroger saying "further options would need to be examined" if Cormack refused to return the funds to the Liberal Party.

He insisted the dispute would not damage the Liberal state election campaign and donations had increased from sources who were disappointed with Cormack. Loading Mr Kroger has faced internal criticism over his handling of the matter, but on Thursday there did not appear to be any immediate threat to his position. The party will get a quarter of Cormack's shares after Federal Court Judge Jonathan Beach handed down his decision, but it failed to gain control of the money. J

ustice Beach ruled that when the Cormack Foundation was established in the 1980s, two of its three shareholders held their shares in trust for the Liberal Party. Loading The number of shareholders has since grown to eight, giving the Liberal Party ownership of just 25 per cent of the foundation's shares. Some within the party have suggested legal costs may exceed $1 million each for both sides. Questions also emerged about whether Cormack's constitution precludes its shareholders from deriving benefit from its funds.

Mr Kroger said the ruling showed the majority of Cormack's shares were owned by the Liberal Party when the foundation was set up, which should be reflected in its current structure. However, a senior Liberal figure attacked Mr Kroger's decision to litigate. “To try and spin this as anything other than a complete disaster is just untenable,” the figure said. A Cormack source said Mr Kroger would have to accept “governance changes”, including tighter financial safeguards, if the Victorian Liberal Party had any chance of receiving donations before the state election.

Loading Relations between the party and its benefactor deteriorated in 2016 after Cormack donated to the election campaigns of Family First and the Liberal Democrats. The foundation was established to manage and invest $15 million generated from the sale of a broadcast licence for radio station 3XY. The licence was originally issued to the United Australia Party, which later joined the Liberal Party. The foundation initially had three founding directors and shareholders – John Calvert-Jones, Hugh Morgan and Stanley Guilfoyle. Mr Morgan and Mr Calvert-Jones resigned in June last year.