The Supreme Court of Canada assessed 40 acres of prime Vancouver real estate at half its market value yesterday solely because the leased land was located on an Indian reserve.
A 5-4 majority said each leaseholder in the leafy residential neighbourhood near the University of British Columbia campus must pay the Musqueam Indian band about $10,000 annually -- half the amount they would have paid without the political uncertainty and potential unrest of an Indian reserve.
"This fact cannot be dismissed or ignored," Mr. Justice Charles Gonthier wrote. "In the future, the market may respond differently. But when the market perceives uncertainty, it is cold comfort to the lessor to believe that the lessees' fears are unwarranted."
Kerry-Lynne Findlay, a Musqueam leaseholder and spokesperson for the group of 73 elated leaseholders, said the decision is "a victory" for non-aboriginal people that will reverberate across the country. She estimated about 60,000 non-aboriginal people, mostly in Ontario, hold leases on land in Indian reserves.
Ms. Findlay also said she hoped the court decision would be "only the first step," and the federal government would now become involved in resolving outstanding issues, including property-tax levels on reserve land.
But Musqueam band Chief Ernie Campbell said the court ruling marked "a sad day" for first nations and the entire country.
"It's unfortunate the value of our land -- because it is Indian land -- is only worth half as much as non-Indian land," he said.
Mr. Campbell added that the decision could have a significant impact on opportunities for first nations across the country to develop their land and raise revenues for their own governments. "This puts us back at least 50 per cent in the value of our land," he said.
Musqueam band lawyer Lou Harvey said the decision is bound to have a financial and psychological impact on other bands who signed long-term leases and then watched their tenants reap profits from increases in market values.
"I'm sure the Supreme Court didn't intend such an implication to arise, but the first band member I saw this morning said: 'It makes me feel like a second-class citizen,' " Mr. Harvey said.
The cost of the leases on Musqueam land has been a highly contentious issue in B.C., coloured by barely controlled racial tensions. Also, the dispute has been used by those opposed to treaty negotiations in B.C. to show how non-aboriginal people would be treated if first nations achieve self-government and jurisdiction over lands they claim in the province.
Musqueam band leaders maintain the dispute is just about business between a landlord and tenants, but leaseholders say much more is at stake.
The decision is also expected to play a role in the federal election. Ms. Findlay, the outspoken representative of the leaseholders, is the Canadian Alliance candidate in Quadra, which includes the Musqueam reserve. The groups' victory in court is expected to help her in the riding now represented by the Liberal Party.
The reserve land has been leased out since 1966, when the leaseholders signed a 99-year lease. Six years earlier, the Musqueam band had surrendered the land to the federal government, which hired a private company to service and subdivide the land.
Rents were set at an average of about $300-$400 per year for the first 30 years and were to be reassessed at various dates throughout the 99-lease to bring them into line with evolving market values.
The lessees went about building homes on the lots, some of which Mr. Harvey said were sold for over $500,000 before 1995, when the Musqueam tried to raise the rent to $23,000 annually.
"This is not Hicksville, Suburbia," Mr. Harvey said. "This is some of the priciest real estate in the country. (Hockey star) Pavel Bure used to live just down the street. And some of these lots are three and half times the normal lot size. They are estate-size."
The question the Supreme Court was obliged to unravel was what the phrase "current market value" meant in the context of the leased reserve land. Was it the market value of comparable, non-reserve lots located across the street? Or, did it relate specifically to unsold land subject to the distinctions of being located on an aboriginal reserve.
The Supreme Court ruling overturned an earlier Federal Court of Appeal decision finding that the land should be comparable to nearby non-reserve land and that lease-holders ought to pay an average of about $28,000 per lot annually.
The Supreme Court majority stated reserve land is not comparable to non-reserve land because:
Tax-paying tenants are prohibited from running for local band council election.
The governance of band councils is uncertain.
There is the ever-present possibility of "native unrest."
The ruling is bittersweet for Ross MacLachlan, a leaseholder, who said he will pay less in rent, but the equity in his home remains extremely low.