Mr Wells had been acting as a conduit between Victorian Liberal leader John Pesutto and Ms Deeming, when he claimed he realised an agreement between the pair would never eventuate.
Mr Wells gave evidence on Monday as part of the defamation trial against Mr Pesutto in the Federal Court of Australia.
Liberal MP Kim Wells said he believed the deal would fully exonerate Moira Deeming. (Joel Carrett/AAP PHOTOS)
Ms Deeming, who has been an Independent MP since being expelled from the Liberals, brought the legal action against Mr Pesutto over comments he made about her attending a transgender-critical women's rights rally in March 2023 outside state parliament.
That rally was attended by right-wing activists who threw Nazi salutes while standing on the parliament steps.
Mr Wells faced questioning from Mr Pesutto's barrister Matthew Collins KC about his involvement in talks between both sides to reach a compromise.
Asked by deputy leader David Southwick to act as a mentor for Ms Deeming, Mr Wells helped broker a deal between the pair.
In that deal Ms Deeming would be suspended for nine months rather than expelled from the party, he said.
There would also be a joint statement from Mr Pesutto's office in conjunction with Ms Deeming, who would in-turn condemn the attendance of Nazis at the rally.
Mr Wells believed the deal included an agreement the party would fully exonerate Ms Deeming from any wrongdoing.
Matthew Collins KC questioned why John Pesutto would promise to exonerate Moira Deeming. (Joel Carrett/AAP PHOTOS)
But when Mr Pesutto took the deal to the party room, he never included the plan to fully exonerate her.
"That's when we knew we'd been double crossed," Mr Wells told the court.
Mr Collins suggested Mr Pesutto never promised to exonerate Ms Deeming and questioned why he would ever do such a thing.
"To secure his leadership," Mr Wells said.
A series of emails written by Ms Deeming to Mr Wells was also shown to the court, airing her frustration the Liberal Party had gone back on its word.
"I only agreed to the suspension on the basis that any and all imputations of guilt associated with the notice to expel me be removed, and that I be publicly exonerated," Ms Deeming wrote.
Current and former Liberals David Hodgett, Joe McCraken and Ryan Smith also gave evidence on Monday.
Others, including including federal Senator Sarah Henderson, Mr Southwick and former MP Matt Bach who now lives in the UK, are expected to be questioned.
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