a multi-million dollar civil action against two local lawyers was struck out on appeal.

Lawyers are now awaiting the imminent release of the reasoning behind the Court of Appeal's decision before they will know if the case will set an important legal precedent.

They hope the decision will help to define more clearly the protection from liability of Bermudian professionals who act as directors for exempted companies which subsequently go bust.

Local lawyers Mr. David Thirkill and Mr. Douglas Pullen were being sued for $19.7 million by the liquidators of Focus Insurance, of which they used to be directors.

It was alleged that they were wilfully negligent and in breach of their statutory fiduciary duty as directors of Focus Insurance.

In trying to get the action struck out, Mr. Pullen and Mr. Thirkill had pointed to a Focus bye-law indemnifying the directors against liability for neglect, errors or oversights, unless it happens through dishonesty.

Such a stipulation is contained in the bye-laws of virtually every Bermuda-based company, whether local or international, and gives directors important security in the event of a business failing.

The outcome of the appeal appeared to focus on the legal interpretation of a company's bye-laws compared with sections 97 and 98 of the Companies Act. When the defendants' original application to strike out the case was refused, Sir James had reasoned that the bye-law defence was of "no effect'' because of sections 97 and 98.

Section 97 requires that directors act honestly and in good faith, while 98 bars any provision, including company bye-laws, from indemnifying directors from liability for "wilful negligence, wilful default, fraud or dishonesty'', said Sir James.

It would seem that the Court of Appeal has disagreed with Sir James' interpretation of this, although nothing will be known for certain until the full appeal judgment is released.

Attorney Mr. Coles Diel, who represents Mr. Thirkill, said yesterday: "We are awaiting with interest for full details of the Court of Appeal's decision to be released.

"We cannot draw too much from the decision until we study the reasoning of the court.'' Lawyer Mr. John Cooper, who represents Mr. Pullen and is vice president of the Bermuda Bar Association, agreed.

He said a number of attorneys on the Island were watching the case with close interest.

"There is a lot of interest in the outcome of the case because of possible effects on other professional people who are directors of companies,'' he said.

A third defendant in the action, former Focus chief Mr. Mark Hardy, had his appeal dismissed by the Court of Appeal.

The case against him, and "proposed'' defendants, his wife, Judith, Caredeed Ltd., Starbook Investments Ltd., Villarosa Anstalt, Magnolia Trading SA, and Bermuda Trust Company (as trustee of Forum Trust) will go ahead.

Mr. Hardy's lawyer, Mr. Julian Hall MP, had previously warned that the "very basis of the international business industry in Bermuda'' was threatened if the action against the defendants was allowed to stand.

The action against Mr. Thirkill and Mr. Pullen can now only go ahead if Focus' liquidators successfully appeal to the Judicial Committee of the Privy Council in London.

Mr. Saul Froomkin, for the liquidators, said he was awaiting details before deciding his next move.