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Medically discharged veterans Ron Cundell (left) and Dennis Manuge (centre) listen as Veterans Ombudsman Col. (ret.) Patrick B. Stogran (right) speaks at a press conference in Ottawa on Tuesday Aug 17, 2010.

Sean Kilpatrick/THE CANADIAN PRESS

A disabled veteran who launched a class-action lawsuit against the federal government said he is thrilled Ottawa will respect a Federal Court ruling and stop clawing back money from veterans' pensions.

Dennis Manuge broke down Tuesday as he thanked his lawyers, federal ministers and thousands of veterans he says will now see repayment of possibly $500-million that had been cut from their monthly payments over a period of nearly 30 years.

"This has been a very difficult experience for Canada's disabled veterans, including me," he said, with his 17-month-old daughter and wife looking on.

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"It is a relief that we are one step closer to being reimbursed."

Defence Minister Peter MacKay and Veterans Affairs Minister Steven Blaney announced earlier in the day that they would not appeal the decision handed down this month that found the government was acting illegally by reducing veteran's long-term disability benefits.

The ruling was a powerful victory for roughly 6,000 veterans, some of whom have seen their payments slashed by thousands of dollars a month.

"This is huge," said Alisa Sellar, whose now bed-ridden husband developed multiple sclerosis after working for years as a fuel air-frame technician and saw his benefits cut by more than $60,000.

"It's been a huge struggle for the last 11 years to try to keep our home and look after my two children and their father. … This is going to make my life a lot easier."

The class action was filed in March, 2007, on behalf of Mr. 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.

Peter Driscoll, Mr. Manuge's lawyer, said a veterans' ombudsman estimated a settlement could exceed $500-million if the payments go back to 1985. But, he added that the clawback provision has been in place since 1979, which could significantly increase that amount.

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Mr. Driscoll said they would soon sit down with federal officials to sort out those details.

"We believe the spirit that Minister MacKay talked about today reflects reimbursing disabled veterans for the money that's been clawed back under this policy," he said.

"So if that policy goes back to 1979, that is the decision of the court."

Mr. MacKay said the cost still had to be worked out and wouldn't reveal how many people it might affect or how far back it would go, but added that the departments were moving quickly to settle the matter.

Asked why it took a court case to address complaints from veterans across the country who said they were losing vital income after becoming ill and disabled while serving in the military, Mr. MacKay said the government needed legal clarification on the benefits.

"We now have that clarity and it has received considerable legal and judicial oversight," he said.

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"As a result of that court action, we are now moving forward out of fairness and respect for those veterans to ensure those benefits are fully paid."

The opposition praised the decision, but said it shouldn't have taken a prolonged legal fight, parliamentary motions and multiple ombudsmen's reports condemning the clawback to make it.

"I am very pleased for Dennis Manuge and for his tireless efforts to obtain justice for himself and for thousands of veterans in Canada," said Liberal Veterans Affairs critic Sean Casey.

"It is sad that the government had to be shamed into doing the right thing, but regardless of their motives, the decision to respect the Federal Court is a welcome development."

Mr. Blaney said all three disability benefits awarded to veterans will be aligned and not be deducted from the new Earnings Loss Benefit under the New Veterans Charter.

Mr. Manuge joined the army in 1994 and spent almost 10 years in uniform, serving a tour in Bosnia in 2001 after he was injured.

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In 2002, while still serving, he began receiving a $444 monthly disability pension on top of his pay, but that changed when he was discharged for medical reasons in December, 2003.

The military's compulsory insurance plan entitled Mr. Manuge to 75 per cent of his former income for two years because he had become too physically disabled to do his job.

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