The Adams Lake Indian Band had argued its interests weren't properly addressed before the government approved the creation of the Sun Peaks municipality in 2010.
B.C. Supreme Court Justice Catherine Bruce agreed in a ruling last year, saying the province had breached its constitutional duty by failing to accommodate the interests of the band.
The province appealed that ruling and the band filed a cross-appeal, saying the initial judge did not make any mistakes.
The Appeal Court has now sided with the government, saying the consultations were adequate and the accommodations made by the province were reasonable in the circumstances.
The judgment said that incorporation of the municipality was "an issue that fell at the low end of the consultation spectrum" with the Adams Lake Indian Band.
Justice Mary Newbury, Justice Richard Low, and Justice David Tysoe ruled the incorporation of the Sun Peaks municipality simply replaced one form of local government with another, as the area was previously governed by the Thompson-Nicola Regional District.
In his decision, Low wrote: "Any impact of incorporation on the Aboriginal claims is difficult to discern; at best, it was minimal. The accommodation made by the Province was reasonable in the circumstances."