Controversial unionist Kathy Jackson will go on trial for the alleged theft of $1.4 million after a Federal Court judge rejected a bid to adjourn the civil case against Ms Jackson as her house caught fire last week.

The house fire in Wombarra, north of Wollongong, is being treated by authorities as suspicious, and is the latest drama to involve Ms Jackson. Previously dubbed a "heroic" whistleblower by Tony Abbott for exposing corruption in the Health Services Union, she is now accused of large-scale fraud.

Former HSU boss Kathy Jackson after a suspicious fire at her home north of Wollongong in late January. Credit:Kirk Gilmour

The Federal Court on Friday heard that Ms Jackson was now well enough for the case against her to proceed, after the trial was delayed in November due to her mental health problems.

She had been in a medical facility south of Sydney, under the care of her psychiatrist as a voluntary patient, and unable to give advice to her lawyers.