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The payout to Omar Khadr and his legal team was given on Wednesday and cashed immediately, according to a source involved in the transaction.Dan Riedlhuber/Reuters

The Trudeau government has quietly paid a $10.5-million settlement to Omar Khadr in a move that circumvents legal efforts by two Americans to prevent him from receiving compensation for abuses he suffered as a teenager at the U.S. military detention facility at Guantanamo Bay, Cuba.

The payout to Mr. Khadr and his legal team was given on Wednesday and cashed immediately, according to a source involved in the transaction. Legal settlements do not fall under taxable income, so Mr. Khadr will not have to pay taxes on the $10.5-million.

"I am not in a position to comment," Mr. Khadr's Toronto lawyer, John Phillips, said when asked by The Globe and Mail on Thursday to confirm the payment. Justice Department lawyer Barney Brucker also refused comment.

Globe editorial: Omar Khadr, Canada and the fragile rule of law

On Friday, a Toronto lawyer acting for an injured U.S. soldier and the widow of the U.S. soldier killed in the 2002 battle that ended in the capture of Mr. Khadr made a brief court appearance in Toronto, to set a date for a "urgent hearing" that could start a potential legal battle over the settlement.

Lawyer David Winer told Justice Thomas McEwen of the Ontario Superior Court that he may try to seek an interim preservation order. If successful, such an order would maintain a defendant's assets pending the final outcome of a legal battle. A date was set for July 13.

Mr. Winer told reporters he was not authorized to speak to the media on behalf of his clients, Tabitha Speer and Layne Morris, who won a 2015 default judgment in Utah against Mr. Khadr for $134-million (U.S.) in damages for his alleged actions in Afghanistan. Mr. Khadr was in prison and did not defend himself.

Friday morning, Justice McEwen noted that the application filed against Mr. Khadr last month looked out-of-date. "If anyone's read the newspaper, they would know there has been an alleged payout," the judge said.

The two sides are now expected to file submissions next week, in advance of a hearing on Thursday.

Lawyers for Mr. Khadr did not attend Friday's hearing.

Mr. Winer said he had attempted to contact Mr. Khadr's Edmonton lawyer, Dennis Edney, by fax, as he did not have his email address. He only later managed to get in touch with Nathan Whitling, another lawyer acting for Mr. Khadr, emailing him late on Thursday evening. But Mr. Winer only read Mr. Whitling's response to him early on Friday morning, as the e-mail had been caught in his spam filter, he told court.

A legal attempt to force the government to take the compensation back from Mr. Khadr would likely be difficult.

"The injunction is moot. It is absolutely moot," University of Ottawa law professor Amir Attaran told The Globe. "Plus, if they are smart, that money is not sitting in Omar Khadr's name, it is sitting in a trust fund or it is sitting in a corporation or some other structure, and good luck in enforcing against that."

The White House, the U.S. Department of Defence and the U.S. embassy in Ottawa did not respond to requests for comment on the compensation package to Mr. Khadr and whether the Trump administration supported the legal challenge by the two Americans.

The office of Public Safety Minister Ralph Goodale would not confirm whether the money was paid to Mr. Khadr or say when an official apology and compensation package would be announced.

"We are still not in a position to provide any comment on the matter one way or another," press secretary Scott Bardsley said, noting that "settlement processes are always strictly confidential by nature."

Mr. Khadr's lawyers had filed a $20-million (Canadian) lawsuit against the federal government. Two federal insiders say Ottawa had no choice but to settle with Mr. Khadr because a court case could have cost taxpayers much more than $10.5-million.

Senior federal officials held a meeting at the Prime Minister's Office on Wednesday afternoon to develop a media strategy for the announcement that will include a written apology to Mr. Khadr.

Officials acknowledged that the Liberal government is concerned about the strong public backlash to the payout on social media, led in part by federal Conservative MPs.

One official said Mr. Goodale intends to make the point that agents for the Canadian Security Intelligence Service participated in U.S. interrogations of Mr. Khadr in 2003, which was against Canadian and international law.

At the U.S. military prison, Mr. Khadr, who was the youngest detainee, was subjected to physical pain, isolation, sleep deprivation, shackling in stressful positions and threatened with rape.

The Supreme Court ruled in 2010 that Canadian officials who took part in the U.S. interrogations had offended the "most basic Canadian standards about the treatment of detained youth suspects."

Although editorials across the country have generally favoured the government's decision, the Conservatives have denounced the settlement and called on Mr. Khadr to turn the money over to Ms. Speer and her two children.

Ms. Speer and Mr. Morris can still try to persuade the courts to recognize the $134-million (U.S.) default judgment (a ruling made in the defendant's absence), although legal experts say that could be an uphill battle for a number of reasons.

"They can still try to enforce that judgment … but the court in Canada has to weigh whether the foreign judgment was arrived at properly before deciding whether to enforce it," Prof. Attaran said. "... Khadr was in prison [at the time of the ruling] and therefore, it shouldn't be recognized. There is also a broad legal authority that if a judgment is unconscionable it shouldn't be enforced, and this one is clearly unconscionable because it is an attempt to hold a child soldier liable."

Mr. Khadr was 15 at the time of the 2002 firefight, in which he was seriously wounded. He spent a decade at the Guantanamo Bay prison before he was sent home to serve time in a maximum-security penitentiary as part of a deal in which he pleaded guilty to killing Sgt. Speer. He later recanted having any role in the death of Sgt. Speer.

A federal insider had told The Globe the Khadr settlement was expected to be announced this week but said, "It's complicated because the Prime Minister is out of the country," at the G20 summit with U.S. President Donald Trump and other world leaders.

Attempts to reach Ms. Speer and Mr. Morris were not successful, although Mr. Morris did express his disappointment with the Khadr compensation in an recent interview with the Toronto Sun, saying he could not understand why the Canadian government would give Mr. Khadr what he called "a reward."

"His reward is being alive because an American medic like Speer used his special skills to keep him alive," he said. "Typically, criminals pay for their crimes, but this time we are paying the criminal for his crimes."

With a report from Steven Chase and Jeff Gray

Sources say the federal government has reached a $10.5-million settlement with former Guantanamo Bay prisoner Omar Khadr. In Dublin Tuesday, Prime Minister Justin Trudeau would not confirm the settlement.

The Canadian Press

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