The man at the centre of a controversy over a Manitoba judge's nude photos still has to pay back the $25,000 he received as part of a settlement almost a decade ago.

In a written ruling Wednesday, the Manitoba Court of Appeal dismissed Alex Chapman's appeal of a Court of Queen's Bench decision that ordered him in June to pay $25,000 back to Winnipeg lawyer Jack King, the husband of Justice Lori Douglas.

King, who had been Chapman's divorce lawyer, has admitted to providing Chapman with sexually explicit photographs of Douglas — a fellow lawyer at the time — in an attempt to convince him to have sex with her in 2003.

The pictures showed Douglas nude in various forms of bondage, with sex toys and performing oral sex. King has said he acted without Douglas's knowledge.

Chapman complained to King's law firm soon afterwards, and that led to a settlement in which King paid Chapman $25,000 on the condition that Chapman return all photos and never publicly discuss what had happened.

But Chapman went public in 2010, accusing both King and Douglas of sexual harassment.

His allegations are now the subject of a public inquiry by the Canadian Judicial Council, which is considering whether to remove Douglas from the bench.

Chapman has admitted that he breached the confidentiality clause because he continues to be haunted by what happened.

In its decision, the Court of Appeal ruled that Chapman must pay all legal costs associated with his appeal.

Douglas has denied any wrongdoing and argued that she should not be penalized for her husband's actions.

The judicial council's inquiry is looking into whether Douglas knew what her husband was doing, and whether she should have disclosed the story when she was applying to be a judge.

During the application process to become a judge, one of the screening questions asks applicants if there is anything in their background that would negatively impact the judiciary. Douglas answered "no" on her application.

Inquiry hearings took place this past summer but are currently suspended.

A council official told CBC News on Wednesday that it's waiting for the Federal Court to rule on a couple of matters, including Chapman's request for full standing — he was granted partial standing — and a request from the attorney general to be removed as a respondent.

A decision is expected within the next few weeks. The official said the inquiry panel can then begin the process of rescheduling the hearings.