Manitoba Appeal Court Judge Martin Freedman was head of the Judicial Advisory Committee (JAC) in 2005 when Justice Lori Douglas was first selected to the Court of Queen's Bench.
He told the inquiry on Friday that he had heard that nude photos of Douglas had been posted online. He also heard that her husband, Jack King, had tried to solicit a man to have sex with Douglas.
Freedman said he was made aware of that a few years earlier, when Manitoba Chief Justice Marc Monnin opposed Douglas's appointment because of the potential risk of embarrassment and blackmail.
But that opposition was withdrawn in 2005 because Monnin believed the photos had been destroyed and the matter wouldn't resurface.
Freedman said he passed that information on to the rest of the JAC.
Once it was clear the JAC wanted to recommend Douglas, it was decided she shouldn't be "highly" recommended, just "recommended," Freedman said.
He added that he didn't know at the time that the photos King took had been posted on an interracial sex website. He also didn't know King posted ads on that same website looking for sex partners for his wife.
Motion to halt rejected
Earlier in the day, the inquiry committee rejected a motion for the hearing to be terminated.
"We have not prejudged. Our minds remain open to persuasion," said committee chair Catherine Fraser.
Sheila Block, the lawyer representing Douglas, made the motion on Thursday to halt the hearing, accusing it of giving the impression it is biased.
She complained the committee's questioning of King was one-sided and aggressive.
The inquiry adjourned early Thursday to consider the motion. The committee returned Friday morning, saying it would not recuse itself.
Responding to the decision on Friday, Block repeated the complaints. She argued the cross-examination of King by George Macintosh, the lawyer who asks questions on behalf of the committee, was "savage, demeaning, humiliating."
Fraser then cut her off, saying the committee ruling had been made.
Removal from the bench
The inquiry is examining whether Douglas should lose her job because she failed to disclose the matter of the naked photos and solicitation of sex partners when she was appointed a judge in 2005.
Douglas has denied all the allegations. Both she and King have said he was responsible for everything without her knowledge.
King has told the inquiry that he uploaded the photos when Douglas and King were family law lawyers at the same firm. He placed the ad for an interracial sex partner in 2002.
He also emailed photos to a client named Alexander Chapman, who is black, and asked him to have sex with Douglas.
Chapman complained to the law firm and King settled the matter within weeks by paying Chapman $25,000 to return all the photos and to never discuss the matter.
Chapman broke that deal in 2010 and complained to the judicial council, insisting Douglas was part of the sexual harassment.
That is what led to the present inquiry.
Complaint of bias
Block's complaint of bias was based on questions made Wednesday by Macintosh, who pushed King on his testimony that Douglas never knew what he did with the naked photos, some of which showed her in bondage gear or performing sex acts.
Macintosh seemed incredulous at King's suggestion that Douglas never looked at or asked about the nude photos, some of which were taken with a Polaroid instant camera.
"So [the picture] is there, the camera's there, you're there, your wife is there. You didn't hide it, did you?" Macintosh asked.
Macintosh and King also butted heads when Macintosh pointed to evidence from one of King's former law partners, who said that King had told him Douglas knew about some of the internet photos.
"That is completely inconsistent with the proposal that your wife knew absolutely nothing," Macintosh said.
Guy Pratte, the independent lawyer leading the inquiry and who represents the public interest, agreed with Block that Macintosh's questioning had gone too far.
"The appearance is incontestable that it was a strong and co-ordinated attack on the witness," Pratte said.
"If inquisition is to be done, it has to be done by independent counsel. You cannot descend into the arena."
Pratte stopped short of calling for a halt to proceedings, but said at the very least, the tone of questions from Macintosh must change.
The committee members include Derek Green, the chief justice of Newfoundland and Labrador, Jacqueline Matheson, chief justice of Prince Edward Island, and Fraser, chief justice of Alberta.
The hearing is a rarity. The Canadian Judicial Council has only held them nine times across the country in 40 years and it has only once recommended that a judge be removed.
In 2009, the council recommended to the federal government that Paul Cosgrove be removed as a justice of the Ontario Superior Court due to incompetence and abuse of his powers.
Cosgrove resigned before the federal government could make its decision.
Appointment process described
The inquiry also learned more about the process that took place when Douglas was appointed to be a judge.
Margaret Rose Jamieson, who is now retired, was an official with the Federal Judicial Affairs Commission and was the executive director of appointments from 2003 to 2009.
She said her role in the appointment process included examining candidates' qualifications and assisting with the preparation of a report to the federal minister of justice.
Jamieson said that in her time on the job, a candidate to become judge was never formally interviewed by the commission. She said that if she spoke to a candidate it was for verification and she did not investigate people.
When asked about Douglas, Jamieson said she remembers little about speaking to her, but does remember Douglas telling her about pictures that may have been provided to someone or posted on the internet.
According to Jamieson, Douglas said the matter had been resolved through a confidential settlement.
Jamieson said the conversation focused on verifying that there had been a settlement.
The inquiry was set to reconvene in December, although no precise dates were given.