Declaratory Judgments

• Author: International Law Group

Dorothy Edgar is a seventy-year-old resident of the United States who served as an executive secretary to Edward Engel, vice- president of finance at Amway Corporation between 1976 and 1979. In 1977, Engel found out that Amway and its Canadian subsidiary, Amway of Canada Ltd. (ACL), were cheating Canadian customs authorities out of millions of dollars, using a complex system of phony books and invoices.

In January of 1979, Engel and Edgar resigned from Amway and several months later the government learned about the fraud. Dwight St. Louis, the Regional Manager of Customs Investigations, phoned Engel and asked for his help but Engel turned him down. When contacted, however, Edgar cooperated by supplying crucial Amway documents showing the nature of the scheme and who was involved in it. A senior Canadian official wrote an internal memo acknowledging the vital nature of the Amway documents that Edgar had supplied.

When the RCMP became involved, both Engel and Edgar cooperated in the criminal prosecution of the Amway companies. After the two companies pleaded guilty, they had to pay $25 million in fines. The RCMP paid Edgar $31,000 for her aid and she released the RCMP from any further obligation to her. Next the Minister of National Revenue (MNR) brought a civil action against the Amway companies but did not ask Edgar for her aid. Engel, however, signed a cooperation agreement with the Ministry and later received $320,000 for his help.

The Amway companies reached a $45 million settlement in September of 1989 of which the "net proceeds" the government actually received were a little more than $16 million. Regulations under both the Customs and the Excise Acts empowered the payment of an award out of net proceeds to a person who "contributed substantially to the detection of a violation of the customs laws or the Excise Act." The MNR has "sole discretion" in the matter and the decision is to be final. [Editorial Note: As we read the statute, the MNR could have awarded Edgar almost $1.6 million.]

In December 1986, Edgar had sent in a written request for the "maximum award" to Edward Sojonky, Q.C., a senior attorney in the Canadian Department of Justice. St. Louis supported her request. It also turned out that as early as 1980, St. Louis had written a confidential Investigator's Report to the Ministry in which he praised Edgar's role in the Amway investigation. After noting Edgar's important help in both the criminal and civil matters, St. Louis...