if its ownership changes hands, a court was told.

Michael Burton QC was addressing the Court of Appeal as the legal battle involving Bermuda CableVision Ltd. (BCL) yesterday took another twist.

He is asking the court to overturn a previous decision and grant an injunction halting BCL's overseas consultancy payments to its US owners.

"The consultancy agreement is a vital part of what we submit is an unlawful scheme,'' said Mr. Burton.

Mr. Burton is representing Colica Trust Company, a nominee company for the Bermuda Telephone Company, which is fighting for control of BCL, owned by the US-based McDonald Group.

In 1987 the McDonald Group invested about $8 million in BCL and set up a system where 60 percent of its profits were paid as consultancy fees to a McDonald subsidiary -- Atlantic Communications Ltd (ACL), in the Cayman Islands.

Colica says the payments and BCL's structure are in breach of Bermuda's 60/40 ownership rules.

Last year in a bid to get the payments halted Colica went to Chief Justice Austin Ward seeking an injunction to stop the cash leaving the Island, but the bid failed.

Yesterday Mr. Burton launched Colica's appeal against the decision saying payments were made to Atlantic in return for certain services.

"The consulting fees are increasing. They keep pace with the profits without any increase in the alleged services that are provided,'' said Mr. Burton.

"There is no evidence as to the substance of the services provided by ACL,'' he added.

Mr. Burton also said if money went to ACL it could be difficult to recover if control of BCL changed hands.

Robin Potts QC, who is representing BCL, said the consultancy payments were part of a package agreed with the McDonalds and could not be unlawful.

Payment of the consultancy fee, he added, did not interfere with control of the company.

"Under the consultancy agreement, the only obligation is payment of 60 percent of the profits. It does not oblige the company to do anything illegal.

There is nothing illegal about paying that sum of money,'' said Mr. Potts.

The McDonald Group is represented by David Richards QC and the hearing is expected to continue today.

BUSINESS BUC