A former Royal Gazette business reporter faces seven days in prison for refusing to reveal his sources in stories he wrote on Bermuda Fire & Marine Co. Ltd.

Reporter David Marchant yesterday refused to answer questions in court about whether information he used in stories he wrote for his publication Inside Bermuda came from Bermuda Fire's liquidators.

Mr. Marchant originally refused to give up his sources on Monday. Arguments were heard yesterday from the defence teams about why he should be held in contempt of court for refusing to answer their questions.

Puisne Judge Vincent Meerabux gave Mr. Marchant until today to consult his lawyer before deciding what to do.

Mr. Justice Meerabux will be deciding on issues relating to the need for journalists to maintain the confidence of their sources, the public interest in freedom of expression, and the relevance of the information to the case.

Mr. Marchant publishes Inside Bermuda from Miami. He left The Royal Gazette in 1993. He is appearing in the case to give evidence on behalf of Bermuda Fire liquidator Ernst & Young.

His initial testimony involved giving evidence affirming that a story he wrote for The Royal Gazette in 1993 of an interview with Bermuda Fire chairman Charles Collis was factual.

However lawyer Robin Potts, who is defending Mr. Collis and four other former Bermuda Fire directors, began questioning Mr. Marchant's credibility as an objective journalist.

They claimed that since he had volunteered to appear on behalf of the liquidator he should no longer be considered as an objective journalist.

Mr. Potts also wanted to know whether information for a story Mr. Marchant wrote on February 26 this year for Inside Bermuda came from the liquidator's team.

At issue is the source for information regarding a witness statement Mr.

Collis gave before he died last year and about settlement negotiations between BF&M Ltd. and the liquidator.

Reporter's reprieve In his story Mr. Marchant said BF&M had at one time made an offer of $10 million to $15 million to settle the case with the liquidator.

Mr. Potts alleged the liquidator was giving Mr. Marchant information that might be held to have broken court rules. He said the information was being released to pressure a settlement in the case.

"It is our submission that Mr. Marchant is not an objective journalist,'' Mr.

Potts alleged. "He has permitted himself to be used as an instrument of the liquidator, and he is pursuing a campaign against the defendants to this suit, with a view to putting pressure upon those defendants to reach an accommodation with the plaintiffs in this suit.'' Royal Gazette Editor Bill Zuill said he could not comment directly on the case.

But he said as a rule, journalists do not reveal their sources because to do so would have a "chilling effect'' on other sources who might provide information which was in the public interest but whose livelihoods -- or lives -- could be damaged if they were identified publicly.

"Your word is your bond when you agree not to identify a source,'' he said.

"It is then your duty not to identify the source, unless you have the person's permission.'' Mr. Zuill also said The Royal Gazette's policy is for journalists not to appear as witnesses in court cases relating to stories except under subpoena, because their credibility would be damaged if they appeared to be acting on behalf of one side or the other.

"In some jurisdictions, the journalist is protected by `shield laws' protecting them from being forced to identify their sources. Unfortunately, no such law exists in Bermuda,'' he added.

David Marchant Graphic file name: MARCHAN