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The Mill River land is cultural and historical significance to Mi’kmaq people, the First Nation says.

A long-simmering property rights dispute between Mi'kmaq people on Prince Edward Island and the provincial government that has landmark potential will be aired in a PEI court this week.

The Mi'kmaq Confederacy of PEI, which represents Abegweit and Lennox Island First Nations, the two Mi'kmaq bands on PEI, has applied for judicial review of the province's sale of a 325-acre golf course and resort property known as Mill River to a private buyer.

The Mi'kmaq assert their traditional territory once encompassed all of PEI and state in their filings that they "have never been conquered or surrendered their interests or rights with respect to these lands and water." The Mill River land, they say, has both cultural and historical significance to Mi'kmaq people and, as such, provincial officials had a legal obligation known as "duty to consult" with the First Nations before agreeing to sell off the property. Its sale will further whittle the amount of already limited Crown land – and thus land for which Indigenous people can receive accommodations – on PEI.

Filings on behalf of the province dispute that the government had a duty to consult on Mill River and deny a failure to do so. While there have been many past duty-to-consult cases across the country, this is the first of its kind to be heard on PEI; experts say its outcome could have weighty implications for the shape of duty-to-consult communications in the future, both on the island and across the country.

It could also have an impact on land-title cases across the Atlantic provinces. The Mi'kmaq have historic peace and friendship treaties with the federal government, but those do not relate to land ownership. Mi'kmaq people have never extinguished their rights to the Maritime territories that historically belonged to Indigenous people, dating back to times before European settlers arrived. Those include all of PEI, Nova Scotia; parts of New Brunswick, Newfoundland and Labrador; and parts of Quebec.

Courts across the country have affirmed provincial governments' duty to consult Indigenous people – and make reasonable accommodations to address their needs – when making changes to or selling applicable Crown lands. But in many jurisdictions, courts are still being asked to weigh in on when and how those consultations must happen, and what they must constitute.

"This is not a step that we wanted to take," said Brian Francis, Chief of Abegweit First Nation, in a news release distributed after the Mi'kmaq Confederacy launched the case last year. "The province refused to deal with us in a co-operative spirit and secretly moved ahead with the deal despite our repeated objections."

In their application, which argues the province failed to meet its constitutional and fiduciary obligations, the Mi'kmaq are seeking a declaration that the province failed to "adequately consult and accommodate." They are also asking for a declaration of the sale as invalid or a suspension of the sale until the Mi'kmaq have been consulted and accommodated.

The transaction, which will see Stratford, Ont.-based businessman Don McDougall pay $500,000 for the golf course, resort, campground and an amusement park. The province would invest an additional $7.6-million to cover capital improvements and anticipated operational losses. In its factum, filed last summer, the province says it did not have an obligation to consult with Mi'kmaq on the land but if it did, the filing states, the province "meaningfully fulfilled its obligation to consult."

Mi'kmaq representatives are expected to testify that the communications between band officials and the province did not amount to adequate consultations.

"It is important, at this stage, to see what position the PEI government takes on the duty to consult, what they did and whether it was adequate," said Bruce Wildsmith, a lawyer who has spent his career working on high-profile Indigenous rights and treaty-related cases.

"What they may have done, which is the lowest form of consulting, is not to ask to consult but to simply notify the aboriginal side that something is about to be done," he said. The court's view will have "implications far beyond PEI" with respect to the threshold for duty to consult.

On the island, members of both the legal and Mi'kmaq communities are concerned that a good working relationship between the Mi'kmaq chiefs and the province has been damaged.

"If the duty to consult isn't being addressed it really flies in the face of that relationship," said Cheryl Simon, a lawyer who specializes in governance work throughout the Maritimes.

Bruce McIvor, a Vancouver-based Indigenous-rights lawyer, said he is dismayed that the case had to go to court.

"These cases have not come forward in the Maritimes to the extent they have in other parts of Canada," Mr. McIvor said. "More importantly, the provincial governments haven't understood or applied their legal obligation with the developments of the law."

Justice Minister Jody Wilson-Raybould says she will support what the community in Halifax decides to do with a controversial statue of the city’s founder. Some members of the local Mi’kmaq community have called for the statue’s removal.

The Canadian Press