Newly released records shed light on a court case that could see two MPs lose their House privileges, following an increasingly fraught back-and-forth between the elections watchdog and the Conservative Party's lawyer.

Chief Electoral Officer Marc Mayrand and Arthur Hamilton, the party's lawyer, debated the election expenses of two Manitoba Conservative MPs in a series of letters between March and May 2013. The letters are included in the campaign spending files of the two MPs, Shelly Glover and James Bezan.

If the dispute isn't resolved, the MPs could be blocked from sitting and voting in the House. That's the penalty under Canadian law for not correcting a campaign spending file.

Glover and Bezan have filed applications in the Manitoba Court of Queen's Bench to prevent themselves from being barred from the House of Commons.

Both MPs are arguing with the agency over how they calculated the costs of signs they used during the 2011 election campaign. Bezan's dispute has grown to include the signs used in the previous two elections, while Glover is also fighting the agency over how to count her campaign staff's salaries.

Both MPs will have spent more than allowed under election law if the campaign expenses are calculated in the way Elections Canada says the rules require.

All candidates must submit their expenses to Elections Canada, which holds the publicly available files along with related letters and emails.

Fighting for spending power

Glover and Bezan are arguing that signs they were already using or had used before should be valued at a lower cost than if they were new.

Mayrand summarizes the problem as one of fairness: essentially, letting incumbents claim their used signs at a reduced cost gives them more room to spend on other items.

"Reporting paid election expenses or non-monetary contributions at less than commercial value would create inaccurate financial returns and render both the election expenses limits and the contribution limits ineffective and in doing so, compromise the level playing field that these limits intend to create," Mayrand wrote to Hamilton.

The costs being fought by Glover's campaign include permanent signs at bus stops in her riding, as well as the cost of a website set up by her riding association.

Hamilton argued Glover didn't use much of that website during the campaign, particularly the "donate" button, which he said was an expensive element of the design.

Mayrand dismissed that argument, however, using numbers from Glover's election file to show the riding association's fundraising was in fact a key part of her campaign.

"During the election period, the association accepted $50,666.76 in contributions of $200 or more, while the Glover campaign accepted only $1,800 in contributions of $200 or more," Mayrand wrote.

"The primary source of funding for the Glover campaign was a $75,000 monetary transfer received from the association on April 30, 2011. It is evident that most contributions to this campaign were directed to the association and not to the candidate, and therefore the functionality of the website was used by the candidate."

Spending too much means penalty

Glover's initial campaign filing showed she spent $81,426.71, only $660.28 shy of her spending limit. The additional expenses Elections Canada says she needs to claim would put her over her cap, which would result in a penalty.

Bezan's dispute is over 18 permanent billboards in his rural riding, for which Elections Canada says he should include the full cost in his filing. Like Glover, Bezan added stickers to show they were election advertising authorized by the campaign.

"The fact that these signs were modified for use in the election ... further demonstrates the requirement to report their use as election expenses," Mayrand wrote.

Bezan would have covered up the permanent signs and erected cheaper temporary signs in front of them, Hamilton replied, had he known he needed to claim the full $36,509.95 cost of the permanent signs as part of his campaign spending.

Bezan's initial filing with Elections Canada showed he spent $85,526.69 on his campaign. Adding the cost of the signs would put him 19,434.43 over the limit.

MPs missed deadline

The MPs were supposed to correct their campaign files by May 17, 2013. One week later, Mayrand sent a letter to House Speaker Andrew Scheer about the missed deadline.

The law "provides that an elected candidate who fails to provide documents required ... may not continue to sit or vote as a member until the corrections have been made," Mayrand wrote in the letter.

Hamilton argued Mayrand jumped the gun, since MPs have two weeks following the deadline to file in court.

"It is deeply disappointing in these circumstances to see that an officer of Parliament has seen fit to prematurely inform the House that MP Bezan is not in compliance with the act ... MP Bezan is making an application specifically for the purpose of determining what constitutes compliance with the act, and is doing so lawfully within legislated timelines," Hamilton wrote, calling it "entirely inappropriate."

In question period, the Liberals demanded Prime Minister Stephen Harper not allow Glover and Bezan to vote on the budget estimates Wednesday night.

"Today, two Conservatives have not provided these [campaign] documents and are therefore not allowed to sit in this House ... is the prime minister seriously going to allow the member from Selkirk-Interlake and from Saint Boniface to vote illegally on over $65 billion?" MP Marc Garneau said.

Conservative MP Pierre Poilievre said Glover and Bezan have the right to take the fight to court.

"The Elections Act is clear on a lot of things. First of all, it is clear that these members have the ability to make this intervention at the court level. We also know that they acted in good faith and there is a difference in interpretation with Elections Canada," he said.

Bezan will argue his case on Sept. 12 in Winnipeg. Glover's Court of Appeal date is June 21.