TORONTO - Ontario's Progressive Conservatives say they won't abandon their fight to prove a link between the Liberal government and the Working Families Coalition, despite another legal setback.

Working Families is behind TV ads portraying PC Leader Tim Hudak as a Bay Street lackey, and sponsored a "Not This Time Ernie" campaign against former PC Premier Ernie Eves in 2003.

The Tories have long complained the coalition is a front for the Liberals, and asked Elections Ontario to investigate the relationship in 2007.

A report prepared for the provincial agency found no evidence the Liberals "control" Working Families, but also detailed meetings between senior Liberals and the coalition.

The Conservatives appealed the Elections Ontario finding to Divisional Court, which this week dismissed the case because Working Families is only a registered entity during an election period.

The court told the Tories they could try criminal court, or file an urgent appeal once the coalition registers for the Oct. 6 election. The Conservatives will likely file the appeal.

The Liberals say Hudak wasted taxpayer money trying to prove a link with Working Families that doesn't exist.

"His whining, complaining and posing is bad enough when it's just more hot air," Liberal Party vice-president Christine McMillan said in an email. "But in this instance he has cost taxpayers millions of dollars for what is really on his party an unsubstantiated PR dodge."

McMillan said it was Elections Ontario that incurred the millions in costs, but the agency said Friday its legal and other costs since 2007 to investigate the PC allegations and for the judicial review total $610,000.

So-called third parties like Working Families have no limits on the amount they can spend supporting or attacking a political candidate or party during an election, while the parties themselves are limited to total campaign spending of approximately $8 million this year.

The Working Families Coalition is made up of various powerful unions who support the Liberals, including the Ontario English Catholic Teachers' Association, the Canadian Auto Workers, the Ontario Nurses' Association, the Service Employees International Union and the Building Trades Council of Ontario.

In addition to actively campaigning against Eves and Hudak, the organization also worked against PC leader John Tory in the 2007 election.

The English Catholic Teachers also decided to take an extra $60 from each of its members this year to create a $3-million war chest for its own pro-Liberal campaign in addition to the union's financial support of the Working Families Coalition.

According to the Elections Ontario report, which was prepared by the law firm Torys LLP, Premier Dalton McGuinty's former chief of staff Don Guy -- the Liberal campaign director in 2003, 2007 and 2011 -- was among the senior party members to meet with Working Families.

"While we have concluded that the WFC was 'independent' of the OLP within the parameters of control and agency ... the WFC's use of consultants with known Liberal connections who were simultaneously providing services both to the WFC and the OLP and, where the very person running the OLP campaign, Don Guy, is president of the polling research firm hired by the WFC, certainly constitutes, in our view, grounds for concern which warranted this investigation."

Documents obtained by The Canadian Press show emails between coalition members about planned commercials, which were copied to Guy.

The Liberals maintain they have nothing to do with the coalition.