Bermuda law firm and realty company, Supreme Court was told yesterday.

Mr. Bob Engel of Santa Fe, New Mexico said he wanted the Bank of Bermuda, and not the Bank of N.T. Butterfield, to hold the 10 percent deposit Canadian businessman Mr. Michael DeGroote was to pay as part of his proposed $8.5-million purchase of Perot's Island from Mrs. MacMillan.

Among the reasons he felt that way were that the Bank of Butterfield was Appleby, Spurling & Kempe's bank, and was also a client of the law firm, Mr.

Engel told court.

Mrs. MacMillan, heiress to a US grain fortune, wants out of the deal she signed to sell Mr. DeGroote the island retreat. Mr. DeGroote, a self-made millionaire, has gone to court to try to force the sale.

While Mr. Engel was Mrs. MacMillan's principal adviser on her worldwide affairs, her law firm in Bermuda at the time of the 1990 negotiations for Perot's Island in Riddell's Bay was AS&K.

Among the companies with whom she listed Perot's Island was the Bank of Butterfield Executor and Trustee Co. Ltd. (Betco). "I was further uncomfortable with the knowledge that our law firm represented the bank in which the listing broker operated,'' he said.

Mr. Engel testified that concern came to the fore in November of 1990, after Mrs. MacMillan accepted Mr. DeGroote's offer for the island and when AS&K was forwarding draft sales agreements to him for his perusal.

Lawyers at AS&K were "suggesting clauses to us that worked only in my judgement to the benefit of the broker,'' Mr. Engel said.

The US lawyer said he was "baffled'' by one clause in a draft sales agreement sent to him on October 26, 1990 by AS&K property unit manager Mr.

Christopher Malley.

The clause said that in the event of a default by the purchaser before the closing date, the agents would share the deposit, Mr. Engel said. The concept "was not new to me'', he told court. "I had seen it proposed by agents in their listing agreements, but not in the purchase agreement between the buyer and the seller.

"This kind of provision being proposed by our lawyers...was unacceptable,'' said Mr. Engel.

Properly worded, the clause would say the deposit went to the vendor in the event of a default by the purchaser, he said.

Earlier, Betco lawyer Mr. Mark Diel attempted to refute the claim made on Monday that Betco realtor Ms Jonelle White acted improperly in passing a list of proposed Perot's Island construction projects to an agent for Mr. DeGroote.

After he was shown a series of documents by Mr. Diel, Mr. Gordon Harris of engineers and designers Woodbourne Associates agreed that Mrs. MacMillan, Mr.

Engel and Mrs. MacMillan's Bermuda lawyer Sen. Jerome Dill of AS&K would have been aware in August, 1990 that Ms White sought the list to satisfy a request from Mr. DeGroote.

But under cross-examination by Mr. Diel, Mr. Harris maintained he gave Ms White the list on the understanding she would not share it with others.