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The land on which a large part of Sarnia, Ont., is built was improperly surrendered by Chippewa Indians almost 150 years ago -- but the social cost of returning the land is unacceptably high, the Ontario Court of Appeal ruled yesterday.

The court said the current owners of the land bought it and built on it in good faith, and to return it would unfairly cause enormous havoc and hardship.

"Aboriginal rights are an integral aspect of the Canadian legal landscape," a 5-0 majority said. "Their shape, definition and enforcement do not, and cannot, exist in a vacuum."

The 1,030-hectare chunk of land in Sarnia is worth hundreds of millions of dollars. It encompasses a significant part of the city, and is occupied by 2,000 businesses and organizations, five schools, five churches and numerous homes.

Yesterday's watershed ruling is a serious blow not only to the Chippewa, but also to other bands across the country hoping to win back disputed land or compensation for its loss.

A lawyer representing the Chippewa band -- Earl Cherniak -- said his clients are "extremely disappointed" by the ruling.

Mr. Cherniak said the court's introduction of the legal notion of equity into the case is the first time the interests of present-day occupants have been pragmatically weighed against the sanctity of aboriginal title.

"It will certainly spawn a lot of litigation over the circumstances of each case," he said. "The whole question of applying discretion to whether aboriginal title has or has not been extinguished is certainly something new and will affect aboriginal land claims all across the country. The courts will be limited only by the imagination of the various sides."

Protected under an 1827 treaty as Chippewa land, the Sarnia land was sold 12 years later by three Chippewa chiefs to a speculator -- Malcolm Cameron. No record exists of the band having collectively agreed to the sale -- as the treaty dictated it must.

The land was not formally conveyed to Mr. Cameron until 1853, when the Crown granted letters patent in the mistaken belief that the land had been properly surrendered.

The Court of Appeal said yesterday that the errors leading to the invalid surrender were technical and resulted from bureaucratic bungling. It noted that despite knowing about the anomaly since 1851, the band issued "not a whisper" of protest before it launched its litigation.

The historical record shows that there is every indication the Crown intended to obtain a formal surrender, the court added.

"In our view, the evidence leads to the inescapable conclusion that, notwithstanding the absence of a surrender, the Chippewas accepted the sale to Cameron," it said.

"In our view, the courts have a discretion to refuse a remedy with respect to the inadvertent error of a dysfunctional bureaucracy that has been relied on for 150 years by innocent third parties."

The court reasoned that in planning their daily affairs, members of the public are routinely forced to assume that public officials have done their jobs properly.

"The administration of government is a human act and errors are inevitable," it said. "The rights of a party aggrieved by an error must be reconciled with the interests of third parties and the interests of orderly administration."

In a move to underscore the importance of their decision, Judges Coulter Osbourne, George Finlayson, David Doherty, Louise Charron and Robert Sharpe signed their judgment: "By the court."

Mr. Cherniak said an appeal to the Supreme Court of Canada is likely. They key issue in any appeal would be whether letters patent can possibly be considered valid if land has been improperly surrendered, he said.

Mr. Cherniak said the Chippewa have consistently made it clear that rather than evicting any present-day occupants of the land, they would settle for compensation for the disputed land.

If the band ultimately wins its case, he said, landowners ought to insist that the Crown foot the bill since it is responsible for the improper surrender of the land.

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