From 1985-1992, Revenu Québec imposed sales tax on the use of gaming machines, such as ones used to play poker.
In 1989, 2731-9359 Québec Inc. was established to receive mandates from the companies distributing these gaming machines. It argued it should be reimbursed for the taxes paid, claiming about $15-20 million, at which time it retained the services of the defendants.
This was the first time the Quebec government was being challenged for taxing the gaming machines and as a result had to change the laws.
There was a series of administrative challenges to the assessments for 1985-89 and a test case. After the Quebec Court of Appeal ruled in favour of the test case in 1995, new claims were filed for 1991-92.
Due to disappointing results and financial losses, in 1998 Québec Inc. and others decided to sue the lawyers who were involved in the case for about $13 million, alleging professional misconduct.
Pierre Cantin of Lavery, de Billy, who represented the defendant lawyers, was surprised when the applicants filed for leave to appeal to the Supreme Court since the defendants had won the arguments at the Quebec Superior Court and Quebec Court of Appeal.
He says Québec Inc. and others obtained some reimbursement from the provincial government, but “the government plays hard ball in a case like that so they decided because of that the lawyers should be responsible. The courts said, ‘No way.’”