Like the issues raised in Fowler, the jurisdiction over statutes of limitations in the civil context takes place north of the border. In general, in Ontario, statutes of limitations for civil suits are subject to the Ontario Limitations Act, which provides for a limitation period of two years (instead of five in the United States and six under the Securities Act) from the date of the search. The Statute of Limitation also authorizes agreements to suspend or extend the statute of limitations, i.e. toll contracts. There is no time to extend the duration of a restriction, but toll agreements require both clear and clear demand and positive acceptance, as recently held in PQ Licensing S.A. V. LPQ Central Canada Inc., 2018 ONCA 331. 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 plaintiff can take advantage of the defendant`s fear by asking the defendant to cooperate in another way. Thus, under the toll agreement, the applicant could require the defendant to provide documents and/or answer questions about the litigation. Applying the general principles of contract law, the Tribunal found that the toll agreements applied only to the dry duties based on the two transactions at issue in the LIA investigation, and not to transactions involving subsequent SEC investigations. The Tribunal found that the toll agreements lacked „the nature of a great open language that could have demonstrated the mutual intention of the parties to extend the limitation period for all claims that the SEC could make.“ Instead, the agreements include, on their clear terms, measures that „have withdrawn“ from the LIA investigation and „no acts resulting from investigations that are themselves arising from the LIA investigation.“ The Tribunal found that, since claims relating to transactions in Libya were prescribed, although they were covered by toll agreements and that fees resulting from subsequent investigations were not covered, all transaction claims in the amended complaint were prescribed. Although no legal proceedings appear to have decided whether Section 2462 can be repealed by an SEC agreement, two have been close and deserve special mention. A toll agreement provides a period of negotiation for the parties before an applicant is required to file an action to enforce legal rights. As a general rule, neither party wants to spend energy and money to prove their case in court. Thus, an agreement on tolls pushes the parties to compromise their positions and settle down. This implicit threat of litigation, if negotiations fail, puts both sides under pressure to resolve the dispute.
Despite (and even because of) their prevalence, the systematic application of toll agreements in SEC investigations is problematic for many reasons. One is that they are generally not entirely voluntary; refuse to sign one, and you can expect to have no courtesy if you respond to requests for an investigation and to be prosecuted without having an opportunity to convince the SEC that the charges are unwarranted.