First Nation says it was shortchanged by millions for land in 2002 settlement

British Columbia's provincial flag flies on a flagpole in Ottawa on July 3, 2020. THE CANADIAN PRESS/Adrian Wyld

The Canadian government paid a nearly $18-million settlement to the Lax Kw’alaams Band in 2002 over land that was given to a different band then sold to a railway more than a century ago, but now the First Nation in B.C. is going to court to right what it calls “historical wrongs.” 

The Lax Kw’alaams Band filed a lawsuit in Federal Court last week, claiming it was underpaid by millions of dollars in its deal with the federal government after the Metlakatla Band got $150 million -- more than eight times more -- for the illegal sale of the same land, in a 2023 settlement. 

The lawsuit says the land in northwest B.C. was illegally divided in 1888 then unlawfully sold to the Grand Trunk Pacific Railway Co. in 1907.

The Lax Kw’alaams Band says the Metlakatla settlement was based on “historical wrongs” by the Canadian government that were unknown to the Lax Kw’alaams at the time of the 2002 settlement, which it now says was “inadequate” and “unconscionable.” 

The lawsuit says the federal government knew the Lax Kw’alaams had “mistakenly” valued the railroad lands at about $18.50 per hectare, when the actual value was more than $76.50 per hectare. 

“The Lax Kw’alaams people ask that these historical wrongs be made right,’ the lawsuit says. 

The band wants the 2002 settlement set aside, in part because of the “inequality of bargaining power” between the federal government and the Lax Kw’alaams at the time it was negotiated.

“Lax Kw’alaams was a small First Nation with limited resources. They were recovering from decades of persecution of their culture and decimation of their people and traditional territories,” the lawsuit says. 

“In contrast, Canada was a wealthy nation of more than 30 million people with vast resources, who benefited from colonialism and its associated historical wrongs against First Nations, including Lax Kw’alaams.”

The Lax Kw’alaams people have resided around present-day Prince Rupert “since time immemorial,” and both their members and the Metlakatla are descended from the Coast Tsimshian Tribes, the lawsuit says. 

They were “nine distinct political entities” before contact with Europeans, but in 1881, Canada’s Indian commissioner allotted the Lax Kw’alaams and Metlakatla more than 28,000 hectares of land and treated them as “one tribe.” 

The lands were then formally established as a reserve a few years later, but in 1888 the commissioner “illegally” divided them, and gave a bigger portion to the Metlakatla over the Lax Kw’alaams objections. 

The lawsuit says a swath of the reserve lands given to the Metlakatla were surrendered to the railway in 1906, with another portion “illegally” sold off from the reserve lands by the government a year later. 

The property’s value rose steeply after the railway was built, the lawsuit says. 

The Lax Kw’alaams Band claims it accepted the settlement mistakenly, and alleges the Canadian government made misrepresentations about its financial stake in the railway, the fair market value of the lands and the size of the amount of land actually sold to the railway. 

The lawsuit also says that “reconciliation was in its infancy” in 2002, as the country had not yet convened the Truth and Reconciliation Commission or established the Specific Claims Tribunal, nor had the United Nations Declaration on the Rights of Indigenous Peoples been adopted. 

The Lax Kw’alaams seeks a declaration to invalidate the 2002 settlement, damages for misrepresentation and $150 million in “equitable compensation.”The band’s lawyer did not immediately respond to a request for comment and the Attorney General of Canada has not filed a response to the claim. 

This report by The Canadian Press was first published Sept. 9, 2025.