The Harper government spent $750,462 in legal fees fighting veterans over the clawback of military pensions, documents tabled in Parliament show.

Federal Liberals have been demanding to see a breakdown of Ottawa's legal costs in the class-action lawsuit launched by veterans advocate Dennis Manuge, of Halifax.

The response was tabled in Parliament last week, but Justice Minister Rob Nicholson refused to release an itemized count, invoking solicitor-client privilege.

Instead, he released a global amount for the lawsuit, which has been dragging its way through the courts since March 2007.

Dennis Manuge was the lead plaintiff in a class action lawsuit brought by disabled veterans against the federal government. (Andrew Vaughan/Canadian Press)

Liberal veterans critic Sean Casey described the legal bill as an "obscene waste of taxpayers' money."

In abandoning the legal fight, the government appointed Stephen Toope, the president of the University of British Columbia, to lead negotiations with Manuge's legal team to arrive at a settlement, including retroactive payments.

The settlement could run as high as $600 million, depending upon how many years back the federal compensation plan will go, say internal government estimates.

Casey said that given the amount of money at stake, he could see the government fighting it tooth and nail — if it had a strong case.

"The court didn't see any merit; the court didn't equivocate. The court slammed them," he said. "They had a weak case from the get-go and it was absolutely irresponsible. The responsible thing for them to do was not to force litigation, but to sit down when this problem reared its ugly head and come to a negotiated settlement."

In siding with veterans last May, Judge Robert Barnes "unreservedly" rejected the government's arguments.

Pain awards as income

Defence Minister Peter MacKay and Veterans Affairs Minister Steven Blaney announced in June the government would not appeal a Federal Court of Canada ruling that rejected clawbacks from the pensions of disabled veterans.

The class-action lawsuit involved Manuge and 4,500 other disabled veterans whose long-term disability benefits were reduced by the amount of the monthly Veterans Affairs disability pension they receive.

The ex-soldiers argued it was unfair and unjust to treat pain and suffering awards as income.

MacKay ordered the clawback to end in July, but there are still some veterans who face the deduction.

Ex-soldiers whose additional awards and payments exceed the limit of 75 per cent of their military salary — often those who were most severely injured — say they're still not being treated fairly.

Those veterans with the most grievous injuries are entitled to receive the maximum benefit, particularly since many can't work, advocates have said.