The civil case against former federal MP Craig Thomson has been sent to mediation.
Federal Court Justice Christopher Jessup made the order during a hearing in Melbourne on Friday.
The Fair Work Commission (FWC) and Thomson were ordered to attend mediation and report back to the court some time after October 21.
The FWC is alleging the former Labor MP misused union funds when he was the Health Services Union national secretary between 2002 and 2007.
They also allege Thomson misused union money to fund his campaign for the seat of Dobell.
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At the same time, Thomson is fighting criminal charges of fraud, allegedly committed while he was national secretary of the HSU.
His barrister Chris McArdle told the Federal Court via videolink from Sydney that any mediation should occur there rather than in Melbourne because his client is cash-strapped after losing his seat in the federal election.
"He's recently unemployed and it'd be a tax on him for us to travel to Melbourne for mediation," he said.
"If we have to go to Melbourne we will, but our client frankly has difficulty affording that."
However Justice Jessup ruled the mediation occur in Melbourne because it is where the proceeding is being conducted.
The matter will be listed for a further directions hearing at a date to be fixed.
Thomson lost his bid to retain his NSW central coast seat of Dobell as an independent in the federal election.
