Karlheinz Schreiber, a consultant and broker, is fighting extradition to Germany, where he faces income tax charges.
Mulroney has acknowledged that Schreiber paid him $300,000 Canadian ($282,000 U.S.) for his assistance in setting up a pasta company. Schreiber demanded the money back, claiming that Mulroney did not do what he had been paid for, The National Post reported.
Luc Lavoie, a Mulroney spokesman, called the lawsuit "a hoax." He said Schreiber's lawyers obtained a default judgment for $470,000 ($442,000) in error.
Mulroney won a large libel settlement with the government of Jean Chretien in 1995 after an investigation into allegations he received kickbacks from Schreiber for an order of Airbuses for AirCanada. At the time, the actual payments, made after Mulroney left politics, were not public knowledge.