12/14/2012 01:19 EST | Updated 02/13/2013 05:12 EST

Court rules federal government failed to consult aboriginals on land in Winnipeg

WINNIPEG - Manitoba First Nations are moving closer to setting up an urban reserve in Winnipeg with a judge's ruling that blocks the federal government's planned sale of the property.

"This court challenge was to tell the government of Canada to stop taking our lands, to stop taking our rights to sovereignty ... and to stop denying us the economic opportunities that so many other Canadians take for granted," Grand Chief Derek Nepinak of the Assembly of Manitoba Chiefs said Friday.

Federal Court Justice Roger Hughes ruled that Ottawa was wrong to start selling a 65-hectare section of a former military base, known as the Kapyong Barracks, without first consulting four First Nations communities which have outstanding land entitlements from Treaty One, signed in 1871.

The Kapyong Barracks were abandoned by the military in 2004 and the federal government in 2007 decided to sell the former base to Canada Lands Co., a Crown redevelopment agency. Aboriginal leaders said they were owed the land and wanted to turn it into a mixture of housing and commercial development to create jobs.

In his written decision, Hughes said the government was "egregious" in not consulting the First Nations.

"Canada did not fulfil its obligations. It did not disclose relevant information that it had. It did not respond in a meaningful way to concerns raised," Hughes wrote.

"The matter is more egregious in the 2006 to 2007 period. Canada simply ignored correspondence written by and on behalf of the applicants."

Hughes added that the four First Nations — Long Plain, Peguis, Roseau River and Sandy Bay — have an "arguable but by no means certain claim" to the Kapyong Barracks. He ordered the government to stop sale of the land until the communities are consulted.

The government said it was studying the ruling.

"Today's ruling does not make a determination on claims to the land. We are reviewing the court's decision before making any decision on next steps," Paloma Aguilar, press secretary to National Defence Minister Peter MacKay, wrote in an email.

Ottawa and the First Nations had been negotiating toward a settlement, but talks stalled earlier this year. First Nations leaders said they are still open to a deal.

"We have been open to negotiating in a meaningful way and unfortunately that hasn't been followed through by government," said Chief Glenn Hudson of the Peguis First Nation.