liquidators of Televest Ltd. should be dismissed.

Puisne Judge the Hon. Mr. Justice Ground heard arguments yesterday that there was a conflict of interest in the law firm of Appleby, Spurling and Kempe acting for both the United Kingdom company that made the initial claim against the Televest Group and the court-appointed liquidators of the five companies involved.

During the week-long hearing, the judge expressed concern that a conflict could exist.

AS&K acts for Sarnia Mutual Investment Ltd., a bankrupt United Kingdom company whose claims against two dormant companies in the Televest group started the chain reaction that led to the apparent failure of credit card company Telecheck Holdings Ltd., as well as Televest.

The firm also acts for Mr. Charles Kempe and Mr. Gil Tucker, appointed in Supreme Court in December as joint provisional liquidators of all five companies.

Lawyer Mr. Julian Hall, who represents three Televest directors, has argued that the same law firm should not represent both a petitioner in winding-up proceedings and the joint provisional liquidators.

Mr. Alan Dunch of AS&K argued that a conflict would arise at the permanent liquidation stage, when parties had to work out who owed what to whom and which creditors took precedence.

But at the present stage, the duty of the provisional liquidators was only to gather in the assets of the companies, and Mr. Hall had failed to show they had given advice more favourable to Sarnia than to any of the other creditors.

"I cannot see how AS&K can be in conflict at this stage, when all they are doing is trying to protect assets.'' In other arguments yesterday, Mr. Dunch told the court of apparent violations of the Companies Act by the Televest directors.

Televest's January 4 prospectus said that auditors Scott Hunter & Co. had given permission for their report to be used in the offering to prospective shareholders, but Scott Hunter & Co. has denied this, he said.

"This is a misrepresentation, and gives rise to civil and criminal remedies,'' Mr. Dunch said.

Mr. Hall argued that charges against the directors were only allegations. His clients Mr. Richard Burns, Mr. Thomas Burns and Mr. Christopher Donnachie always believed they were acting lawfully, he said.

The refusal of Price Waterhouse to provide a court-ordered undertaking against potential damages was grounds in itself for dismissing the provisional liquidators of Televest, Mr. Hall said.

On December 29, the Chief Justice ordered Price Waterhouse to provide an undertaking against potential damages in case it was found petitions to wind up the Televest companies should never have been brought.

Yesterday, Mr. Dunch said that Price Waterhouse -- whose employees are the liquidators of Sarnia -- was never before the court and "have made it clear to me that they will not be putting up an undertaking in respect of this case.'' The UK company could not be compelled to provide and undertaking and considered the Chief Justice's order "a nullity,'' Mr. Dunch said.

Mr. Hall argued: "The court having ordered Price Waterhouse to provide an undertaking, and Price Waterhouse having failed to comply, and Your Lordship lacking the jurisdiction to overturn the learned Chief Justice's order in that regard, my applications to discharge the provisional liquidators should be acted on.''