Former ministerial staffer Natalie Baini is suing the NSW division of the Liberal Party claiming she was unfairly blocked from being preselected for the inner west Sydney seat of Reid at the 2019 federal election.
On Thursday, Ms Baini admitted the party's status as an unincorporated association meant it could not actually be pursued in the lawsuit.
She told the NSW Supreme Court that this status should not be misused as a "shield" that prevented accountability.
"I struggle with the fact that it uses its unincorporated association status as an opportunity to conduct itself in any manner it wishes because it cannot be sued," she told Justice Sarah McNaughton.
Before the 2022 federal election, Ms Baini says she made a complaint about "serious misconduct" against then Liberal staffer Yaron Finkelstein.
However, the party did nothing about it, she said.
"There is no other workplace in Australia that would be permitted to ignore such a complaint. But the Liberal Party did and now we know it can't be sued," she told the court.
Mr Finkelstein was allowed to sit on a roundtable to decide candidate nominations in 2022 despite Ms Baini making a complaint about him, the court heard.
"I'm more concerned about the impact that it's had on me in terms of mental health and anxiety and trauma, knowing that my career was placed into the hands of somebody who had been the subject of a fairly serious report," she said.
Ms Baini eventually resigned from the Liberal Party, running as an independent for the seat of Reid. She was unsuccessful and the seat was won by Labor's Sally Sitou.
She said she was not the only woman to be ignored by the party and have malicious lies spread around for reputational ruin.
"In my experience, the Liberal Party does not even respect women enough to fabricate intellectual scandals about them. It will always relate to something sexual," she said.
Having the electoral roll with details of all Australians in the hands of an unaccountable entity like the Liberal Party was a concern, Ms Baini told the court.
"There is no legal recourse for its misuse. At this point, I would say it's no different to the local footy club having the electoral roll."
Her lawsuit, which seeks damages for breach of privacy and injurious falsehood, also targets the party's NSW state director Chris Stone who first received the complaint about Mr Finkelstein.
The Liberal Party and Mr Stone attempted to strike out Ms Baini's pleadings on Thursday, arguing that the party could not be sued and that the case against the state director was vague and "legally embarrassing".
"(The lawsuit) discloses no cause of action. There's a lot of general complaint but nothing that one could plead to," said barrister Sam Duggan.
Justice McNaughton reserved her decision.
Ms Baini was in a consensual extra-marital relationship with former Liberal MP Craig Laundy and claims she was unfairly blocked from the 2019 pre-selection after this affair ended.
She has filed a separate lawsuit against Mr Laundy, his wife Suzanne and his daughter Sophie for harmful conduct including trespass, injurious falsehood and assault that allegedly occurred after the pair broke up.
The Laundys have denied all allegations against them.
