JUDGMENT

Abdul Hamid Mohamad J:

This is an application by the defendant for an order that the order of this court dated 5 January 2000 registering the judgment of the Singapore High Court dated 20 August 1999 against the defendant be set aside.

The first defendant had obtained a loan from the plaintiff bank, a bank in Singapore. The second defendant stood as guarantor for the debt. The plaintiff filed two suits in Singapore. After a full trial, judgment was given in the sum of RM1,375,666.85 with further interest and costs. Costs were taxed and reviewed and the amount awarded is equivalent to RM1,357,550.

The whole case turns on one main issue ie whether the enforcement of the judgment would be contrary to public policy in Malaysia.

Section 5, of the Reciprocal Enforcement of Judgements Act 1958 ("REJA 1958") provides:

5(1) On an application in that behalf duly made by any party against whom a registered judgment may be enforced, the registration of the judgment -

(a) Shall be set aside if the registering court is satisfied -

...

(v) that the enforcement of the judgement would be contrary to public policy in Malaysia.

The grounds forwarded by learned counsel for the defendants are:

(a) Breach of Banking and Financial Institutions Act 1989 ("BAFIA").

(b) Breach of the Exchange Control Act 1953("ECA").

Before considering the grounds, the facts regarding the loan transaction should be stated first.

The plaintiff is the Singapore branch of a French Bank. Ms. Rita Chou was at the material time a Vice-President of the plaintiff's private banking division. The first defendant is a Malaysian citizen. The second defendant was a Singapore citizen. He had been a permanent resident of Malaysia since 1996. He has business in Malaysia. He had made an application to become a Malaysian citizen on 20 January 1998 and became a Malaysian citizen from 15 November 1999. They both live in Kuala Lumpur. It is not disputed that they are "resident in Malaysia" for the purpose of ECA. Sometime in September 1996, during her marketing trip to Kuala Lumpur, Ms. Rita Chou met the second defendant at the Hilton Hotel. She asked him to introduce some clients to her. Ms. Rita Chou offered to provide credit facilities through the plaintiff in the form of a foreign currency shortterm loan. At that time the second defendant was assisting the first defendant to manage her share trading accounts in Malaysia. Ms. Rita Chou represented to the second defendant that the plaintiff would be able to provide the first defendant with a foreign currency loan facility to facilitate her share trading in Malaysia. So, the first defendant opened an offshore account with the plaintiff. Ms. Rita Chou prepared the necessary documentation for the opening of the account. The documents were sent to the first defendant in Kuala Lumpur for executions and were duly executed by her in Kuala Lumpur. Ms. Rita Chou also prepared the necessary documentation for the foreign currency loan with a limit of USD500,000 which was also executed by the first defendant in Kuala Lumpur. The second defendant executed a personal guarantee in respect of the loan, also in Kuala Lumpur. The first defendant then deposited stocks and shares with the plaintiff's nominee in Singapore namely, BNP Nominees (Singapore) Pte Ltd and the plaintiff's nominee in Kuala Lumpur namely BNP Nominees (Asing) Sdn Bhd. During the material time both the said nominees were holding the said stocks and shares for the benefit of the plaintiff. As stated by learned counsel for the defendants in his written submission which in my opinion is a correct statement of facts:

As the loan was a foreign currency loan, it could be drawn down in any currency as instructed by the 1st Defendant. It is the Plaintiff's case that instructions were given to draw down part of the Loan in Japanese Yen and to convert the existing Ringgit loans at that material time to Japanese Yen. The 1st Defendant denies giving such instructions.

As a res