Elections Canada official Andre Thouin carries a box from Conservative Party headquarters in Ottawa after an RCMP search in April 2008. (Tom Hanson/Canadian Press) The Conservative Party of Canada has won a decisive victory in Federal Court over Elections Canada in its long-running dispute over the so-called "in-and-out" election financing scheme.

Justice Luc Martineau in Ottawa set aside the chief electoral officer's decision not to approve $1.1 million in Conservative Party expenses challenged by Elections Canada after the 2006 federal election.

The court determined the expenses were incurred by the applicants — identified in court documents as official agents of two Conservative candidates — and ordered the chief electoral officer to approve the claims.

The ruling means the Tories will be entitled to reimbursements on the purchase of certain regional media spots in the 2006 election that featured nationally produced ads, followed by the taglines of individual candidates.

Elections Canada alleged the Conservatives directed money to local candidates, who then transferred the funds back to the party to spend on more advertising for the national campaign. It alleged the Tories set up an elaborate plan involving the participation of 67 candidates, including four cabinet ministers.

The Elections Canada investigation culminated in an RCMP raid of Conservative Party headquarters in Ottawa in April 2008 at the request of William Corbett, commissioner of elections.

The Conservatives have steadfastly maintained the party followed the Elections Act and disagreed with Elections Canada's interpretation of the law.

In his judgment, Martineau ordered Elections Canada to pay for the applicants' litigation costs. Elections Canada said it will review the court's decision before deciding whether to appeal.

An investigation by the commissioner of elections into advertising spending during the 2006 campaign will not be affected by Monday's ruling.