A Canadian Judicial Council panel has accepted an offer from Lori Douglas, a senior Manitoba judge, to retire early in exchange for avoiding a hearing on whether she should be kicked off the bench over nude photos of her that appeared on the internet.

The decision by the three-person panel hearing Douglas's case was announced Monday afternoon in Winnipeg, just as a new round of hearings was supposed to begin.

Douglas's lawyer, Sheila Block, said the agreement was struck with the council to stay the proceedings in return for the associate chief justice's offer to retire in May 2015.

In addition to staying the proceedings, Douglas would have the photographs in question returned to her so she can destroy them.

As a result of the settlement, the hearings are adjourned until May 2015. Assuming that the conditions of the deal are met and Douglas retires, the hearings will formally conclude.

Provided those conditions are met, the decision puts an end to hearings that have been delayed for four years and have already cost at least $3 million in public money.

Douglas faced allegations that she failed to disclose the photos when she applied to become a judge in 2004 and that the pictures could undermine public confidence in the justice system.

The panel had set aside 10 days for the hearing, which was expected to receive testimony from 23 witnesses.

Douglas's lawyers had fought for a ban on the graphic sex photographs during the hearing. Her lawyer won a temporary ban in an 11th-hour decision on Friday.

In that ruling, Federal Court Judge Richard Mosley raised questions about how the hearing would proceed without photos central to the allegations against her.

If the CJC inquiry panel had determined that Douglas was guilty of misconduct, it could have asked the council to recommend her removal from the bench.

Photos posted without permission

The complaint against Douglas, an associate chief justice, arose after her now-late husband, Jack King, took graphic photos of her — some of which depict bondage — and posted them on an internet site without her knowledge or permission in 2003.

A former client of King's, Alexander Chapman, alleged that Douglas sexually harassed him and that King showed him the pictures of the judge to entice him to have sex with her.

King, who died in April, would later describe his behaviour as "bizarre, ridiculous, stupid, self-indulgent, grotesque."

The current committee dropped an allegation that Douglas had sexually harassed Chapman, who had re-posted the images online in violation of an agreement to return or destroy them.

When asked about the CJC's acceptance of Douglas's early retirement deal on Monday, Chapman called it "disgusting."

"You cannot sweep discipline under the carpet and that's what they seem to be doing," he told CBC News.

"The CJC has just played right into her hand. If she wanted to retire, why wasn't that decision made two years ago?"

Chapman said he is writing a book about the whole affair.

1st round of hearings collapsed

The first round of hearings began in 2012, but soon collapsed amid accusations levelled by Douglas that the five-judge committee was biased against her.

The committee's independent counsel resigned, followed by the resignation of panel members a year ago.

In March, the council appointed a new panel, comprised of two male judges and a female lawyer. Also appointed was a female lawyer to act as independent counsel to the panel.

The Canadian Judicial Council — essentially comprising the country's chief and associate chief Superior Court justices — has drawn scathing criticism for its handling of the case, especially its contention that it does not answer to the courts.

Norman Sabourin, the CJC's executive director, said the council had to consider the public's best interests in determining whether the hearings should continue.

"Do we want to continue spending public funds to argue in Federal Court points that arise of these proceedings in the knowledge that the judge will be out of office in 5.5 months?" he said.

When asked if Douglas could be stripped of her pension or charged for part of the $3-million price tag for the proceedings, Sabourin said she couldn't.

"There are lots of other things you cannot do, and that includes suspending a judge's pay, because who's going to do it and on what basis? That would be an attack on the judge's independence, really," he said.

The $3 million that has been spent on the Douglas case does not include her salary.

Douglas has not been working since the CJC hearings began, but she has been receiving a full salary, which, according to the federal Judges Act, amounts to $315,900 a year for associate chief justices.

Statement from Lori Douglas's lawyer

The following is the statement read by Sheila Block to the CJC panel:

Rising to ask you to stay this hearing so that a settlement agreed to by the Canadian judicial Council with ACJ Lori Douglas can bring an end to the proceedings and all the many court related processes that are ongoing or will arise if the matter continues.

Here are the terms of the settlement the two parties, CJC and ACJ Douglas, have agreed upon [for] the cessation of the hearing by way of a stay. ACJ Douglas will submit her notice electing early retirement as of May 21, 2015. It is signed and in the hands of the committee for judicial affairs and will be sent to the minister immediately on the settlement. ACJ Douglas will be given back by the CJC all the photos it possessed and distributed to anyone through the CJC so she may destroy them.

CJC states it respects her decision to elect early retirement. CJC will respect this committee's decision to stay the proceedings to facilitate the resolution. The CJC states that there is no public interest in further expanding public funds for ongoing proceedings when the judge is retiring in that time frame. It also agrees there is no public interest in pursuing the various options before the federal courts and ACJ Douglas agrees as does the CJC to discontinue these various actions once the retirement takes effect and no further funds or judicial resources will be expensed in the meantime.

The CJC states that no conclusions should be drawn about the merits of the allegations against ACJ Douglas or about the merits of any of the issues before the courts. When the CJC says it respects ACJ Douglas' decision to elect to retire it has been advised of her reasons. For her part in the trauma of the past four years has taken a grave toll on her, on her family, those who have stood by her.

On a personal level she has been devastated by the death of her mother and her husband during this. Even though she loved being a judge and considered it an honour and privilege to serve she is at the point where this is the best choice for her, for her son and elderly father, for her late husband's children and the rest of her family.

To withstand more weeks of hearing into intensely private matters and risk the viewing of her intimate images by colleagues and others is more than she can bear. So she is voluntarily giving up her constitutionally secure tenure at her right to use this process to fight for that and for her vindication in the process. It is common ground that the proceedings before the courts which are connected to this case will not be completed by the early retirement date and accordingly a great deal of public resources both funds and judicial resources will be saved in the public interest by this consentual resolution with the CJC.

The CJC in assessing this resolution and agreed to it is of course regulated required to act in the public interest that is its mandate both the CJC and the judge agree this should be resolved and that this resolution is in the public interest.