It should be noted, for this comparison, that the doctrine of “appropriate means” provides for some limited exceptions to the two-year limitation period, which essentially apply even when an agreement is not registered. Namely, according to Section 5 (a) (a) (iv) the clock may be postponed if the applicant does not yet know that a judicial procedure would be an appropriate means to remedy the loss: for the applicants, it is a potential vital artery to widen the time required to initiate legal action. Applicants may not be required to take legal action when they rely on experts to set a right or to determine whether another jurisdiction has exclusive jurisdiction or not. Nevertheless, the doctrine of appropriate means is not without limits and applicants are always best served to obtain a toll agreement in order to avoid a dispute over statutes of limitations. Under the Ontario Securities Act, there is generally a six-year statute limitation period for staff to initiate enforcement proceedings. The legislation does not explicitly authorize toll agreements and its impact on regulatory issues under the Securities Act is not clear without such a provision. It should be noted that toll agreements are more familiar in private civil litigation, even under the Securities Act. With respect to civil liability in private disputes under the Securities Act, no action can be brought more than the (i) previous 180 days after the applicant first became aware of the facts that gave the remedy (ii) or three years after the date of the transaction. The accused, Donald Fowler, was a former broker who was charged with excessive trafficking to generate commissions at the expense of his clients. The SEC opened its investigation in early 2014.
As part of the investigation, Fowler signed two toll agreements that brought the statute of limitations into effect between March 2016 and February 2017. The complaint was filed by the SEC in January 2017. The Manhattan court ruled in favour of the SEC and ordered Fowler to remove commissions and commissions of $132,076, as well as a civil fine of $15,000 for each of the 13 clients Fowler had cheated on (for a total of $1,950,000). As we have already written, Canadian securities regulators sometimes seek toll agreements, particularly in cases where a statute of limitations is approaching and settlement negotiations are underway, when these agreements are much less used by the regulator in Canada than in the United States. Under the toll agreement, counsel for the applicant should have a firm understanding of all prescription issues. Information gathered informally during negotiations should not be subject to costly requests for investigation. This mutual fear helps to bring the parties together and formally resolve the issue. Since an agreement is more likely under the toll agreement, the parties enjoy the benefits of litigation (threat of a possible money decision against the defendant) without initiating litigation or incurring costs.
Before filing an appeal or starting an arbitration procedure, you should consider a simple legal instrument, called a toll agreement, that can help resolve disputes and avoid litigation altogether.