04/07/2014 05:05 EDT | Updated 06/07/2014 05:59 EDT

Lawyer asks court to maintain 120-year-old ruling giving away native land

VANCOUVER - When Canada's frontier was being settled more than 120 years ago, a man entrusted by the dominion to protect native interests carved out a four-hectare plot of land along a northern British Columbia river as a vital connector in the pre-railway trade route.

Then-reserve commissioner Peter O'Reilly wrote in his diary the allotment would serve the Hudson's Bay Company as a place for its storehouse in an area otherwise dangerously impassable due to treacherous canyon landscape.

The federal government argued in a Vancouver court on Monday in defence of its representative as it challenged a decision by a federal tribunal that ruled the land was wrongly excluded from a reserve created for local First Nations.

"We should not be sitting here 120 years later second-guessing O'Reilly's decision," lawyer Chris Elsner told a panel of three federal appeals court judges.

"He concluded that the public interest outweighed the First Nation interest, and he was correct."

The government wants the Federal Court to overturn the February 19 decision by the Specific Claims Tribunal, which said the Kitselas First Nation must be compensated for the land known as Lot 113.

The single plot is located amidst an 800-hectare park and reserve, called Gitaus, that is held by the Kitselas band about 22 kilometres east of Terrace, B.C., along the Skeena River. The band's chief said it's now privately-owned land after being sold by the historic fur-trading company.

Chiefs of both the Kitselas and Williams Lake Indian bands, members of council and elders packed the federal courtroom to hear the government's objection over the tribunal they had believed had final say in the matter.

"We were like, all right, great, terrific — the process works," said Kitselas Chief Joe Bevan about the initial ruling. "And then you get thrown a left. We thought it was over."

The upcoming ruling will set a precedent for ongoing claims across the country, he added.

"It affects a lot of other cases. You don't want them going back and forth with the tribunal."

Elsner told the court that commissioner O'Reilly may have held a protective role, but his decision should be excused because he was simply unaware of the site's cultural significance to the natives. Further, there was a "public safety issue" at play that made the decision sensible.

Traders used the place along the transportation route to off-load goods, Elsner explained.

"This wasn't a place that just would have benefited settlers, but also First Nations who relied on trade," he said. "The Skeena River was the public highway at the time."

Even if Canada is found to be somewhat responsible, the province must accept its role too, Elsner added.

But Clo Ostrove, a lawyer for a coalition of First Nations taking part in the proceedings with intervener status, said it was Canada's duty alone.

"The Indians were vulnerable to whether and how the commission did its job," she said. "If they didn't do their job ... Canada is committed to addressing this."

No date has yet been set for the appeal of a similar tribunal ruling over land taken 150 years ago from the Williams Lake Indian Band, in the B.C. Interior, that now encompasses the city's present-day downtown core.

The tribunal, an independent body created in 2008 to speed up the land claims process, has made just two rulings to date.

Note to readers: This is a corrected story. An earlier version said Williams Lake was at the centre of the decision. Instead, the decision involves a portion of land near the Skeena River.