It`s probably too late now.
But if it only happens when you`re around then YOU are the cause.
The Terrier is obviously getting p!ssed off with the Collie trying to grab your attention while it`s getting some.
The most obvious answer, if you want to keep both dogs, is take them both to behavioural classess. Or visit a dog psychiatrist. Not only will he diagnose the problem, he`ll also give you a course of action to take..
Personally, i`d take a bucket of cold water to the pair of them when they are fighting. Suddenly getting doused in cold water will stop them fighting, at least for the moment.
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John Smith: So what am I then? Nothing. I`m just a story.
Doctor: You`re an echo. That`s all. A TimeLord is so much more. A sum of knowledge; a code. A shared history. A shared suffering. Only it`s gone now, all of it. Gone forever.