JUDGMENT

Salleh Abas FJ (delivering the judgment of the Court):

In this appeal certain transactions took place in Singapore between the respondents, a London confirming house, and a Singapore company known as Southern Equipment Suppliers (S) Pte. Ltd., relating to the financing of purchases of goods by the latter. The appellants who are the directors of Southern Equipment Suppliers (S) Pte. Ltd. and live in Johore Bharu, gave a guarantee to the respondents with respect to those transactions. The question to be determined in this appeal is whether by entering into those transactions the respondents are a moneylender within the meaning of our Moneylenders'

Ordinance No. 42 of 1951, so that the guarantee which the respondents sought to enforce against the appellants is unenforceable, as to do so would be to undermine our Moneylenders' Ordinance, 1951.

It is a general principle of law that any transaction taking place outside the jurisdiction can only be enforced in the local Courts if they are not contrary to the local law and regulations. Under the continental system the priority of lex lociover lex fori is based on the doctrine of odre public or jus cogens under which any domestic law designed to protect public welfare and morals must prevail over an inconsistent foreign rule. In English legal system, foreign law is recognised only if it is not repugnant to the distinctive policy of English law, be it statute or common law. This principle as regards Malaysian law of contracts can be found embodied in s. 24 of the Contracts Act, 1950, Act 136. (See also Cheshire's Pte. International Law: 9th Edn. pp. 134-139). Thus the point is well taken if it can be shown that the transactions between the respondents and Southern Equipment Suppliers (S) Pte. Ltd. are moneylending transactions, and that by entering into these transactions and by their business practice as a confirming house they are moneylenders. Before dealing with the submission, it is necessary to state in some detail the facts of this case.

The respondents are a company incorporated on 5 November 1927 in the United Kingdom carrying on inter alia, the business of a confirming house. On 18 April 1975, they entered into an agreement with Southern Equipment Suppliers (S) Pte. Ltd. (referred to in this judgment as the client) whereby they gave the client confirming facilities for the client's purchases of goods from a supplier in the United Kingdom. According to the agreement, the respondents would confirm the purchases made by the client, pay for the goods and draw a fixed date bill of exchange covering the confirming facilities so granted; each bill to be drawn for acceptance by the client against shipping documents on the arrival of the steamer carrying the goods, and payable 150 days thereafter. For the services rendered the respondents were to charge a 3% commission on the cif value of shipments with a minimum of STG50 per shipment. Interest at the prevailing rate was also payable on the date of payment on the principal sum of the bill for the period of credit granted. All other charges, such as Bank's letters of credit, cables, postages, petty airmail postages, local taxes etc. were all for the client's account. The respondents would arrange for marine insurance, but they were not responsible for the outturn of the quality of the goods, although they were willing to assist the client should there be any problems arising relating thereto. The confirming facilities were granted on condition that the appellants should stand as guarantors. Consequently, on the same date, i.e. 18 April 1975, both the appellants signed in Singapore a guarantee stating that they requested the respondents to act as a confirming house for the client and "to confirm purchases of goods for the client and to accept, negotiate or purchase any bills or drafts on behalf of the client and/or to give or arrange credit or accommodation or financial facilities to or for the client". By the guarantee which