Ottawa should abide by a court ruling to stop clawing back the disability pensions of veterans, says Liberal veterans affairs critic and Charlottetown MP Sean Casey.

On Tuesday a federal court in Halifax sided with a group of veterans who sued the government over the way it handles disability insurance. About 4,500 veterans across Canada joined a class-action lawsuit, claiming the federal government was unfairly trying to get back money paid out for pain and suffering.

Casey told CBC News Wednesday the government should not consider an appeal.

"The judge didn't equivocate... It was a slam-dunk for the veterans. When you read the judgement you just shake your head as to why the heck the government put these guys through it," Casey said.

"They should have negotiated a settlement. I would hope that the Conservatives would do the right thing and pay what's owing to them and close the book."

The case had hinged on the meaning of the word income.

The government claimed the long-term disability benefits are only meant to help meet the 75 per cent income mark members were making before they were released from the military. The veterans argued the pension was not income, but rather recognition for the service and sacrifice of members of the Canadian Forces.

The court ruled the government's actions amounted to a breach of policy.

Defence Minister Peter MacKay said in the House of Commons his department and the Department of Justice are reviewing the case.