In what could be the most expensive land claim of its kind, an Ontario native band says the federal government owes it compensation for property that includes the city of Toronto.

The land claim stretches back to 1787 when one of King George III's representatives signed a treaty at the Bay of Quinte with the Mississaugas. The Mississaugas reportedly surrendered all their land north of Lake Ontario.

The deed remained unsigned, however, and the Crown approached the aboriginals again in 1805. The king's men offered 10 shillings – or 120 pennies – for roughly 100,000 hectares, property that currently covers all of Toronto and part of its suburbs.

The Mississaugas, who now live on a 2,400-hectare reserve west of Toronto, say the land was never properly surrendered.

Bryan Laforme, chief of the New Credit First Nation, says it's the government's legal responsibility to deal with the issue.

Band councillor Sandra Bonham says any compensation would be used to improve life on the reserve, such as "employment, education and housing."

The land would command an extremely high selling price on the current market.

The land is the equivalent of about 250,000 acres. Toronto realtor David Burstow says land without buildings in the Toronto area is worth anywhere from $50,000 to $1 million per acre.

Experts in land compensation deals say making claimants wealthy is not the point – it's to create a fair deal.

"You would be looking at the underlying land values similar to (what) they would have been at the time they were deprived," said Toronto lawyer Ben Jetten.

The chief federal negotiator says Ottawa is open to negotiate the claim, but says the case does pose difficulties. "The major challenge is re-creating the historical situation to make sure that we know what the transaction was in the first place," said David Walker.