Former Health Services Union (HSU) boss Kathy Jackson has been ordered to pay over $1.3 million in compensation misappropriating union funds.

Ms Jackson – considered in some circles to be the world’s worst whistleblower – was sued by the union on allegations she had set up a slush fund with union money that was then funnelled to support her opulent lifestyle.

It was spent on large cash withdrawals, luxury goods, valuable artwork, fine wine and fancy dining.

She was even accused of spending around $100,000 on her divorce from former union figure Jeff Jackson.

Lawyers for the HSU said the misappropriated money was siphoned out of the National Health Development Account.

Ms Jackson claimed that all HSU branches contributed to the fund for researching and campaigning purposes.

But the lawyers argued that the funds for the account came from a single source - Ms Jackson's Victorian HSU East branch.

The court heard accounts of Ms Jackson taking $8,000 out of the account at one point, giving $100 each to ten HSU members and pocketing the rest.

It also heard that Ms Jackson has told colleagues she was allowed $55,000 in entitlements each year on top of her six-figure salary as national secretary of the union.

The union said it had no evidence of such an arrangement.

The trial heard evidence that Ms Jackson withdrew funds from union accounts while in Las Vegas, San Francisco, Washington and Heathrow Airport in London.

She was also accused of spending the money on business-class airfares for her daughter to France, shopping trips at Myer and David Jones and Costco, and a $14,000 dinner at exclusive Melbourne restaurant Fenix.

Ms Jackson famously blew the whistle on former HSU national secretary Craig Thomson - after taking his job - for his own misappropriation of union funds.

Thomson was found guilty last year of 13 theft charges, and still faces an HSU lawsuit against him in the Federal Court.

Ms Jackson tried to have the civil trial against her abandoned, claiming bankruptcy and telling the court she was too mentally unwell to defend herself.

She also accused Australia’s senior unions of conspiring to destroy her “physically, emotionally and financially” as payback for blowing the whistle on Mr Thomson.

Her lawyer said her exposure of Thomson “could have assisted in the downfall of the Labor Gillard government”.

“They hate her ... the senior unions in Australia were out to get my client and they got her good,” he told the court, before later withdrawing from the case, leaving Ms Jackson unrepresented.

Counsel assisting the Royal Commission into Trade Union Corruption and Governance has recommended Ms Jackson be charged with criminal offences.