Defendants in the Bermuda Fire & Marine Insurance Co. Ltd. fraud trial yesterday argued in Supreme Court against an application by the liquidator to reopen the case against them by subpoenaing the former chief executive of the company as a witness.

The liquidator's application to reopen their case could bring the civil trial to a grinding halt, about 60 days into the proceedings.

The application is unusual as lawyers for the liquidator wrapped up their case on June 30. Since then defendant BF&M Ltd. has already brought five witnesses to the stand.

The legal issue revolves around claims about whether BF&M misled the liquidator into believing they were going to call former Bermuda Fire chief executive Cyril Rance as a witness, or whether their lawyers blundered by not subpoenaing him in the first place.

Liquidator Ernst & Young is applying to reopen their case by calling Mr.

Rance, who was the top executive of Bermuda Fire until 1989.

The application came after defendant BF&M informed the court they were not going to call Mr. Rance as a witness.

According to lawyers the application is a test of new procedures being used in Supreme Court to run the Bermuda Fire civil trial.

Bermuda has been following the old practice of what's described as "trial by ambush'', a tradition under which plaintiffs and defendants don't reveal their witnesses and what they're going to say until they actually take the stand.

Those involved in the Bermuda Fire case agreed from the outset to instead follow UK procedures by fully disclosing their lineup of witnesses and pre-trial testimony before the court proceedings began.

The UK system was put in place in an attempt to cut down on trial costs and time.

In making their application to re-open their case the liquidator's lawyers are arguing that the disclosure of witnesses and subsequent statements by the defendants showed a full intention to bring Mr. Rance to the stand.

They argued they were then "misled'' into thinking they would be able to question him about events at Bermuda Fire.

Elizabeth Gloster, lawyer for BF&M, yesterday disputed those claims, arguing that the liquidator had a chance to call Mr. Rance in pre-trial submissions and they chose not to at the time.

She argued that in submitting a list of witnesses and their pre-trial statements, BF&M was under no requirement to actually call those witnesses.

"It's the absolute right of defendants to choose their witnesses and the order in which they appear,'' she said.

She claimed the liquidator's lawyers had made a blunder by not calling Mr.

Rance and were now attempting to "plug the holes in their case''.

Robin Potts, lawyer for five former directors of Bermuda Fire, argued that the fundamental nature of the trial process was for the plaintiff to bear the legal and evidential burden of proof.

If the plaintiff then forgot or made a tactical error in not calling a witness then it was their "tough luck'', he said.

"They are attempting to have another go at it,'' he told Supreme Court Pusine Judge Vincent Meerabux.

"...They gambled that Mr. Rance would enter the witness box.'' He argued the liquidator should have got a letter from BF&M lawyers committing to bringing Mr. Rance as a witness.

"That's what any half decent lawyer would do,'' he claimed.

The arguments continue today. John Patterson, Bermuda Fire's financial officer during the time of the 1991 reorganisation, is expected to take the stand for BF&M in the afternoon.

BF&M has also decided not to call former Bermuda Fire director William Frith and Charles Dyer from its list of witnesses.

BUSINESS BUC