The succession plans of former NSW Liberal minister Chris Hartcher have been foiled after his preferred replacement in the state seat of Terrigal failed to win preselection.
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In a tight ballot on Tuesday night, Central Coast businessman Adam Crouch defeated former Howard government minister Jim Lloyd in a bid for the Liberal candidacy at the election next March.
The result is another humiliation for Mr Hartcher, who was investigated by the Independent Commission Against Corruption for allegedly masterminding a scheme to funnel illegal political donations to candidates before the 2011 election.
He moved to the crossbench and later announced his retirement from Parliament. Mr Hartcher, from the party's old hard-right faction, had strongly backed Mr Lloyd's play for Terrigal.
Fairfax Media understands Mr Crouch, who runs a printing business, won the ballot 16 votes to 15. He must now be endorsed by the party's state executive.
A senior Liberal source from the party's moderates faction said Mr Crouch's win was a rejection of Mr Hartcher's continued attempts to exert control over the party.
"[We have made] a clean break with those who've attempted to stain the name of the party, and put in place a fresh candidate with the right principles," the source said.
However a source from the party's Right said the result meant the seat, won comfortably by the Liberals in 2011, had now become a "headache" because Mr Crouch was not a well-known candidate.
"If Lloyd had been preselected, he's a well-known entity on the Central Coast, and we wouldn't have had to spend that much money on the campaign," the source said, adding the seat would now be considered "marginal".
The source rejected speculation that had Mr Lloyd been elected, he intended to step down to make way for Mr Hartcher's protege Aaron Henry.
Mr Henry's standing was damaged following his appearance at the Independent Commission Against Corruption, when he likened dirty tricks undertaken by Young Liberals to the cult movie Fight Club.
Meantime, Port Stephens Liberal MP Craig Baumann on Wednesday withdrew his candidacy for the state election "for the good of the government".
The corruption watchdog heard Mr Baumann took $79,684 from developers Jeff McCloy and Hilton Grugeon and hid the payments by issuing "sham" invoices.
The commission will defer its report into that investigation until after a High Court challenge involving Crown Prosecutor Margaret Cunneen.
Mr Baumann said the high court challenge was unlikely to occur before the election and "I do not want the Premier [Mike Baird] to be in a position where he has to leave the future of Port Stephens in limbo."
