But in its unanimous decision the high court said some some restrictions on third-party spending are necessary.
``The forms of expression provided for in (the section) are so restrictive that they come close to being a total ban'', the court said.
``In our view there are alternative solutions far better than the limits imposed.''
The court suggested it would be reasonable to limit third-party spending to about $1,000 for groups and individuals.
Robert Libman took the case to court following the 1992 referendum on the Charlottetown accord when he was leader of the Equality party. He had wanted to run his own campaign instead of supporting either the official Yes or No sides.
But Quebec's referendum law says any official interest groups wanting to campaign can only have their views disseminated through the media as long as they don't pay for it. They could also spend up to $600 to hold a public meeting.
Libman, now the head of the League for Human Rights of B'nai Brith Canada, argued the law unfairly restricted his options.
He said if a referendum were held on federal constitutional offers in the province and the Equality party believed the law would weaken the federal government, the party would be forced to share the spotlight in the No committee with separatists, rather than run its own campaign.