The defendants, as shareholders, guaranteed the liabilities of their company under a supply contract with the claimant. The claimant served statutory demands upon the defendants who sought to have them set aside on the basis that no demands had been served under the guarantee prior to the service of the statutory demands. The defendants contended that liability under the guarantee was not immediately payable when the statutory demands were served as the wording of the guarantees provided “the guarantor shall pay to the beneficiary on demand,” and no demand had previously been made. The claimant argued that the liability under the guarantee was immediately payable without the need for a prior demand as the guarantee also provided that the guarantors were liable as primary obligors.

The court agreed with the claimant. Where sureties covenanted to pay as principal debtors or primary obligors, a demand was unnecessary even if the liability was expressed to be payable on demand. No demand for payment before service of the statutory demands was necessary. There had been an immediate obligation to pay and the statutory demands had been properly served.

TS & S Global Ltd v Fithian-Franks and others