Embattled MP Craig Thomson has had two hits in his favour over Health Services Union (HSU) fund misuse charges he is facing. First, the former prostitute who initially claimed that Mr Thomson was her client recanted her statement two weeks ago. On Thursday, a court sacked HSU whistleblower Kathy Jackson who was instrumental in filing of charges against the MP.

Justice Geoffrey Flick found the state union, HSUeast and the east branch of the federal HSU are no longer functioning effectively. After removing Ms Jackson from her post as executive president of the state union, he appointed former Federal Court Judge Michael Moore administrator of both organisations. Mr Flick also ordered the demerging of the east branch into separate unions based in New South Wales and Victoria.

HSU acting National President Chris Brown expressed satisfaction with Mr Flick's decision.

"The dysfunctionality of the East Branch was causing enormous problems for the union.... Now that the branch has been put into administration what it will enable is for the warring factions to no longer continue within their fight within the union itself," World News Australia quoted Mr Brown.

Ms Jackson, who sought a reopening of the case, retained her position as national secretary which has a $150,000 annual salary. However, she lost the executive president post of the state union which has the larger $270,000 per annum pay.

Among the indicators of dysfunctions in the HSU organisations are disrupted meetings, more resignations and inability to have an effective investigation of complaints and claims of misconduct about officers.

Ms Jackson said she was surprised by the judge's decision and insisted the union did not cause the HSU East corruption.

"I'll be continuing my efforts in the coming weeks to continue to expose corruption and to ensure that stooges of corrupt officials don't get elected using funds stolen from the members themselves," Ms Jackson said in a statement.

Mr Flick said Ms Jackson must not remain in her position in the HSU east branch since "she is very much at the epicentre of the dispute." He set aside her argument that she would suffer substantial injustice of she lost her $270,000-a-year job.

Following his ruling, Mr Flick said the only option left was to vacate all office and hold new elections for the state union, HSUeast and HSU East branch.

Mr Thomson has accused Ms Jackson of masterminding the filing of charges against him. He has denied the accusations of misusing $500,000 of HSU funds, including the use of the union credit cards to pay for the services of a prostitute.

The former sex trade worker initially told the TV programme A Current Affair of Channel 9 in an unaired interview that Mr Thomson was a client, but eventually recanted and said she was out of the country when the alleged sexual dalliance with the MP took place sometime in 2005.

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