Fourteen days into a major fraud trial a box of documents relating to the late Charles Collis and his involvement with collapsed insurer Bermuda Fire & Marine Co. Ltd. has been discovered in his son's office at law firm Conyers Dill & Pearman.

The discovery, revealed yesterday in Supreme Court, could turn out to be a major blow to the defence in the civil case and brought criticism from Supreme Court Puisne Judge Vincent Meerabux on Mr. Collis' estate trustess.

He ordered the three trustees -- Mr. Collis' sons John, Charles and Graham -- to sign an affidavit swearing under oath that they have checked through their father's belongings for all the relevant documents requested by Bermuda Fire's liquidators.

The three are lawyers at Conyers Dill & Pearman. The box was found in John Collis' office. John Collis was Bermuda Fire's legal advisor. Conyers Dill & Pearman, which turned over the missing box, is also being sued for negligence in the suit.

One of the documents apparently shows Mr. Collis knew of a Cooper & Lines report which advised splitting off Bermuda Fire's domestic business to BF&M Ltd. so that potential creditors couldn't get at the profitable assets, liquidator's lawyer Gabriel Moss alleged yesterday.

Mr. Collis, who died last year, stated under oath in December 1994 that he had never seen a copy of the report, written by Cooper & Lines accountant Tom Miller. Cooper & Lines is also being sued for negligence.

"What is particularly important about this copy is that it is found on John Collis' file, but even more important is it is found on John Collis' file with his father Charles Collis' handwriting on it,'' Mr. Moss said. "Contrast that with Charles Collis' witness statement that he expressly denied having seen the Miller memorandum.'' While Mr. Moss did not make any allegations of perjury against Mr. Collis, the document could be used to discredit his witness statements that he and the other four directors being sued for damages in the suit did not know Bermuda Fire was about to become insolvent.

Ironically the defence for the five directors reportedly are submitting his preliminary witness statements for submission at the trial as has liquidator Ernst & Young.

In the statement Mr. Collis was questioned about the report by Tom Miller.

"I do not believe I ever did,'' Mr. Collis reportedly said in 1994. "The first time I saw it was when I read it in the last few weeks.'' He was then asked whether he recalled having discussions about the document with Cooper & Lines or any one else.

"I recall no such discussion with anybody since I have never seen it.'' Mr. Moss called the discovery of the box of documents a "serious failure of discovery'' and a "serious breech of the rules''.

Bermuda Fire documents found In a civil case all participants are required to produce documents relating to the suit upon request.

Liquidators Ernst & Young are suing Bermuda Fire's five former directors who sat on the finance committee, auditors Coopers & Lines, and legal advisor Conyers Dill & Pearman for damages over the company's collapse in 1993.

The liquidators are attempting to seize back ownership in BF&M Ltd. from current shareholders who received a share dividend in the company. Bermuda Fire was split in two in 1991 leaving the company with the unprofitable international business while newly created company BF&M Ltd. held the profitable domestic business.

At the time Bermuda Fire shareholders received a special share dividend in BF&M. Bermuda Fire went into liquidation in 1993 owing about $450 million to international creditors.

The liquidators claim the 1991 split was an illegal transaction because the five former directors, their auditors and legal advisor knew or suspected Bermuda Fire was insolvent. They are claiming the five former directors were party to a "fraudulent transaction'' in creating BF&M, and that Cooper & Lines and Conyers Dill & Pearman were negligent in their duties by allowing the split to go ahead.

The five former directors are William Cox, Donald Lines, Gregory Haycock, Michael Collier and Mr. Collis. The liquidators are claiming damages against Mr. Collis' estate. Mr. Collis was also chairman of the board.

Bermuda Fire's 1991 five former directors, Cooper & Lines, and Conyers Dill & Pearman have denied the liquidators' claims. The defendants have said they acted in the best interests of the shareholders and policyholders, who include the creditors.

BUSINESS BUC