02/14/2013 10:00 EST | Updated 04/16/2013 05:12 EDT

Most veterans support $888-million deal, but want Ottawa to pay hefty legal fee

HALIFAX - Many disabled veterans say they support a $887.8-million settlement with Ottawa over their clawed back pension benefits, but want the federal government to pay the hefty legal fees racked up during their six-year legal fight.

Dozens of veterans, many using canes or wheelchairs, spoke at a Federal Court hearing Thursday that is reviewing the proposed class-action settlement over federal clawbacks to the former military members' long-term disability benefits.

Many said that while they support the deal, they want Ottawa to foot the $66.6-million bill for a team of lawyers who handled the case as it wound its way through several court levels over more than five years.

"Defence Minister Peter MacKay should go back and tell the government they should pay the fees, and not the veterans," Richard Gaudet, a class member, told Judge Robert Barnes.

Several other class members echoed that view, with one saying the 7,500 claimants would likely still be seeing their payments reduced if the Halifax law firm hadn't taken on the case in 2007.

"I have no issue with that at all," Steve Kent, a disabled vet who was released from the military after suffering a severe back injury, said outside the court hearing.

"Something's better than nothing and if we left it up to our government, we'd still be with nothing."

Ward Branch, a lawyer for the veterans, said only about 15 wrote to express their concerns about the agreement, which will either be approved or rejected by Barnes. Of about 270 class members who wrote to the lawyers, 78 of them specifically supported the legal fees the firm will earn if the court approves it.

He said that the firm also reduced its fee to 7.5 per cent of the total award, down from the original contract amount of 30 per cent.

"It's very hard to make everyone happy all of the time, but we came achingly close," Branch said on the first day of the two-day hearing.

The legal fees became a contentious issue after MacKay called the costs "grossly excessive," which is expected to be the Crown's central argument when it makes its case Friday.

But critics said it was the federal government itself that forced the case to go on for years and become costly because it fought the case at every step.

NDP veterans affairs critic Peter Stoffer said he was astonished when he heard the federal government was objecting to the legal fees.

"I literally reversed my lunch when I heard that," Stoffer told a news conference Thursday in Ottawa.

"It is simply unconscionable that the government can now stand up and complain about legal fees when they were the ones that forced these honoured people into the courts in the first place."

Mike Blais, president of Canadian Veterans Advocacy, said he and other veterans are disappointed by how the federal government has conducted itself throughout the court proceedings.

"The government should be taking full responsibility for prolonging this court action, for putting veterans through a great deal of stress, turmoil and indecision," Blais said.

"We feel we've been insulted."

Several veterans said at the hearing that the deal should include damages and that arrangements should be made to prevent them from having to pay far higher taxes after receiving their retroactive payments under the deal.

The deal includes $424.3 million in retroactive pay to veterans and dates back to 1976.

The settlement was announced last month, years after veteran Dennis Manuge launched a class-action lawsuit against Ottawa.

The lawsuit was on behalf of himself and other disabled veterans whose long-term disability benefits were reduced by the amount of the monthly Veterans Affairs disability pensions they received.

Manuge's legal team scored its victory last spring when the Federal Court said it was unfair of the federal government to treat pain and suffering awards as income. MacKay later said the government wouldn't appeal and appointed a negotiator to cut a deal.