The party’s lease at the Parramatta headquarters expires on December 28.

Justice Michael Slattery told the hearing at the Supreme Court that the level of “distrust” between the parties was so great, he was “starting to wonder whether the [political] party should be wound up”.

Mr Knox’s lawyer Trevor Hall said the affairs of the party were “so unmanageable, so ungovernable a receiver should be appointed,” adding that there was a basis to seek winding up of the organisation.

However Justice Slattery said it was not an option he wished to consider on Tuesday.

“If I were to appoint a receiver today that’s just going to cost a fortune,” Justice Slattery said. “It’s the nuclear option I simply don’t want to take today.”

Mr Knox lodged a court summons against Mr Nile, his wife Silvana Nero, acting state director Annie Wright, Mark Moody-Basedow and the party itself in September. It claimed the defendants were not valid paid members of the state board, describing it as “completely dysfunctional” and questioning its validity.

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Mr Knox also accused Mr Nile and his wife of inappropriately claiming almost $100,000 from the party in breach of electoral commission rules on gaining a personal advantage.

Justice Slattery said it was clear there was a considerable degree of “mistrust” between the parties involved and said he was inclined to give the parties leave to bring a motion for the winding up of the organisation “if either party wants to do that”.

In a statement, Mr Nile said he understood Justice Slattery believed it was in the best interests of the CDP’s members that the party should continue.

“The CDP Party has never been healthier and stronger than now. We have had a great increase of membership in the last few months. Additionally, the party was successfully re-registered with the Electoral Commission last August,” Mr Nile said. “The CDP is the only Christian voice in government and the party will continue as the past dispute was only with a handful of members and we believe this has been resolved.”

Both parties were asked to submit suggested orders to resolve the dispute over access to the party headquarters late on Tuesday. The matter will readjourn before Justice Slattery on Wednesday.

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