Alexander Chapman has lost an appeal of a lower-court ruling that ordered him to repay a $25,000 settlement from his former lawyer, Jack King.
In 2003, King gave Chapman sexually explicit photos of King's wife, Lori Douglas, who was later appointed a judge.
Chapman accused King of sexual harassment but agreed to settle the matter, return all the photos and never discuss the issue in exchange for $25,000.
In 2010, Chapman broke the agreement, went public and filed a complaint against the judge with the Canadian Judicial Council.
King sued Chapman for breaking the settlement and won the money back, Chapman appealed, but has now been rejected by the Manitoba Court of Appeal.
"In his reasons, the motions judge correctly stated the legal principles to be applied and clearly understood the factual issues arising from the affidavit evidence," Justice Richard Chartier wrote Wednesday on behalf of the three-member Appeal Court.
"He found that a breach (of the settlement agreement) had occurred."
The courts have already dismissed Chapman's lawsuits against King and his former law firm.
Chapman's complaint against Douglas remains before the judicial council, but it has become bogged down in procedural wrangling. Douglas's lawyer has accused the inquiry panel of bias and has asked the Federal Court to quash the hearings. The lawyer who originally led the inquiry, Guy Pratte, resigned earlier this year because of the way the hearings were being conducted.
There is no word yet on when the judicial council hearings may resume. They could lead to Douglas losing her job. She has not heard any cases since 2010.
Among the allegations before the inquiry is that Douglas did not disclose the photos, some of which were uploaded to an interracial sex website and show her in bondage gear, when she applied to be a judge. She applied three times before finally being accepted in 2005.
The inquiry is also examining whether the very existence of the photos precludes Douglas from continuing in her job. The inquiry hearings got underway briefly in Winnipeg last summer before they were suspended pending the Federal Court hearings.
Douglas has said all along that her husband shared the photos without her knowledge and that she should not be punished for her husband's misdeeds.
She and King are still married.