Advocates for the survivors had accused the government of thwarting their compensation claims by hiding the documents — many of them from a criminal investigation of St. Anne's in northern Ontario.
Aboriginal Affairs Minister Bernard Valcourt has now written New Democrat Charlie Angus to say the appropriate forum to resolve the issue is through the courts.
"To bring clarity to these issues, I have instructed departmental officials to work with the Department of Justice to make a request for direction to the Ontario Superior Court," Valcourt states.
From 1904 to 1976, hundreds of aboriginal children from remote James Bay communities were sent to St. Anne's in Fort Albany, Ont., one of 140 church-run residential schools in Canada set up to "civilize" First Nations.
In the 1990s, Ontario Provincial Police conducted a five-year investigation of abuse at the school.
The investigation and resulting criminal proceedings yielded the documents at issue.
In his letter, Valcourt says the government cannot simply hand them over because they belong to Ontario.
In addition, he says, the files contain confidential statements from those questioned by police and are subject to privacy legislation.
Advocates for the victims argue the material could corroborate their abuse claims under the independent assessment process set up to settle a class-action suit against the feds over the residential schools.
Ontario Superior Court is overseeing implementation of the settlement of the class action.
Angus, who had recently complained about the issue to Valcourt, called the decision a "breakthrough."
"Clearly federal lawyers are concerned that their failure to disclose the existence of nearly 1,000 police statements on abuse has compromised the adjudication process," Angus said Monday.
"The federal government had an obligation to tell the claimants that they knew about the evidence of abuse at St. Anne's."
Angus said the failure of the government to tell victims about the police investigation and the evidence gathered had undermined the credibility of the hearings.
The government must now ensure the survivors have the resources to challenge the government when the matter goes to court, he said.
Students at St. Anne's complained they had been whipped, kicked and beaten.
Boys and girls said they were raped or otherwise sexually abused. Children said they were made to eat their own vomit.
The police investigation resulted in criminal charges against seven men and women. Five were convicted for offences such as assault causing bodily harm, indecent assault and administering a noxious substance.
The investigation also turned up evidence of an electric chair made by a supervisor.
Victims said they were made to sit on the metal-framed chair with its plywood seat and wires leading to a black box. A supervisor would crank a handle, jolting the bodies.
"The small boys used to have their legs flying in front of them,'' Edmund Metatawabin, 65, who said he was twice put in the chair as a seven-year-old in the mid-1950s, told The Canadian Press.
"The sight of a child being electrocuted and their legs waving in front of them was a funny sight for the missionaries and they'd all be laughing."