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Brian Mulroney has been ordered by a court to pay $470,000 to former business associate Karlheinz Schreiber.

The stunning order, which caught Mr. Mulroney's lawyers off guard, comes in a default judgment by the Ontario Superior Court of Justice.

Mr. Schreiber sued the former prime minister to recoup $300,000 in cash the businessman says he handed to Mr. Mulroney over three meetings in hotel rooms in New York and Montreal in 1993 and 1994. Mr. Mulroney had already left politics at the time.

Mulroney's lawyer, Kenneth Prehogan, appeared shocked by the ruling, saying it would not stand because he has argued all along that the Ontario court had no jurisdiction to consider the lawsuit.

"The first I heard of it was when you notified me of it, and we're going to take immediate steps to have that judgment set aside," he said Thursday in an interview.

"Mr. Mulroney has challenged the Ontario court's jurisdiction because the case has nothing to do with the province of Ontario."

In his statement of claim, Mr. Schreiber said the cash was to enlist Mr. Mulroney's help in establishing an arms factory in Quebec, with a head office in Ottawa, and a pasta business in Ontario.

The lawsuit claimed Mr. Mulroney did not follow through on his business commitments.

The former prime minister, who had a deadline to respond to the lawsuit, did not do so, which meant that the court ordered him this week to pay Mr. Schreiber the $300,000, plus interest, which works out to about $470,000.

The court judgment, signed by a registrar, also orders Mr. Mulroney to pay $1,250 in costs stemming from the legal action.

The former prime minister's lawyers didn't file a defence because they believe the case should be argued in Quebec.

In March, Mr. Prehogan called Mr. Schreiber's lawsuit a "meritless action" and said his client would respond.

Mr. Schreiber's lawyer, Richard Anka, was unavailable for comment.

Luc Lavoie, a spokesman for Mr. Mulroney, said a complaint would be filed against Mr. Anka with the Law Society of Upper Canada.

Mr. Schreiber has been fighting extradition to Germany, where he's wanted on charges of tax evasion, fraud and bribery.

It's the latest twist in a long-running legal saga involving the former Conservative leader, now an elder party statesman and adviser to Prime Minister Stephen Harper.

The federal Liberal government apologized to Mr. Mulroney in early 1997 for wording in a Justice Department letter to Swiss authorities two years earlier that left the impression he and others had received illegal payments in connection with the 1988 purchase of 34 Airbus Industrie jetliners by then Crown-owned Air Canada.

Federal authorities had also paid the former prime minister's $2-million legal bill.

The apology came just hours before Mr. Mulroney's $50-million libel suit against the government and the Mounties was to go to trial in Montreal.

The RCMP insisted at the time that despite the settlement its probe of the Airbus transaction was still actively being pursued. However, in an April 2003 statement, the police force said it had wrapped up its Airbus investigation.

Seven months later author William Kaplan, who has written extensively on the Airbus affair, revealed that Mr. Schreiber - also named in the federal government's 1995 letter to Switzerland - had paid Mr. Mulroney $300,000 in a series of instalments beginning in 1993, shortly after he left office.

Mr. Lavoie has said the money was compensation for help promoting Mr. Schreiber's pasta business as well as arranging introductions and meetings with international business executives.

Mr. Schreiber told the CBC's The Fifth Estate in a program broadcast in February 2006 that he gave the money to the former prime minister to help him ease back into private life.

Mr. Schreiber all but dismissed the notion Mr. Mulroney had aided his business efforts, saying the former prime minister had simply sent him a brochure from U.S. agri-food giant Archer Daniels Midland, where Mr. Mulroney was a director.

Mr. Lavoie noted earlier this year that Schreiber had previously testified under oath that he had a paid retainer for business advice from Mulroney.

"Which one, in the balance of things, is the most important?" Mr. Lavoie asked of the two accounts.

Asked this week whether his forthcoming memoirs would fully explain the $300,000 payments, the former prime minister simply urged a reporter to purchase the volume.

"Buy a copy. Buy a copy. Buy a copy."

Mr. Kaplan said Thursday the court judgment was an interesting but peripheral development.

"I mean, Mr. Mulroney may be successful at getting it set aside and having a trial on the merits," Mr. Kaplan said. "And that would certainly be interesting . . . because at that time, the question could be asked: what did he do for the money?"

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