UK: ROT Claims – The Rules Of The Game

Last Updated: 26 January 2015
Article by Melania Constable and Aziz Abdul

Re: Blue Monkey Gaming Limited v Hudson & Others [2014]

The above reported case provides some useful guidance in relation to the steps required to be taken by office-holders in identifying retention of title ("ROT") property and adjudicating ROT claims.

The Court held that the administrators were not obliged to identify property owned by a third party and were entitled to reject that third party's ROT claim on the basis of the incomplete evidence submitted by it.


The case arose out of the administration of the Agora Group which was one of the largest operators in the UK Adult Gaming Industry. MDM Leisure Ltd ("MDM") supplied fruit machines to the Agora Group for its use in arcades. Each invoice contained an ROT clause which specified: "the legal ownership of goods herein is retained by the seller until full and final settlement".

When the Agora Group entered administration in December 2009, MDM claimed to be owed nearly £4,000,000 in respect of gaming machines allegedly subject to the ROT clause. MDM assigned its claims to the Claimant, Blue Monkey Gaming Limited ("BMG").

BMG subsequently pursued a claim in conversion personally against the administrators on grounds that the administrators: (a) had caused or procured the company to use MDM's machines to make money for the administration outside the terms of bailment pursuant to which they had originally been supplied; and (b) ought to have delivered up the machines to MDM after an alleged unequivocal demand for their return.

In this case, the administrators had traded the businesses (at a loss) and subsequently agreed a sale of certain of its business and assets. The sale documentation included the usual terms about title and excluded ROT assets from the sale.

The Court dismissed the claim and held the administrators were not liable for wrongful interference with the supplier's goods.


An action for wrongful interference with goods (that is to say, conversion) comes within the meaning of section 1(a) of the Torts (Interference with Goods) Act 1977. The most common way of showing a conversion by unlawful retention of property is to prove that the defendant, having the asset in his possession, refused to give it up on demand made by the party entitled to possession (Barclays Mercantile v Sibec Ltd [1992] 1WLR 1253).

In this case, the court had to consider whether the administrators were personally liable in a claim for conversion on grounds that the administrators had caused or procured to the company in administration to use certain of its gaming machines.

BMG argued that it had (by virtue of a letter and/or submission of its responses to the administrators' standard ROT questionnaire) made a genuine and unequivocal demand for the return of the machines which the administrators had not complied with. BMG also argued that the administrators were under a duty to compile a detailed inventory of assets and identify the machines that are owned by individual third parties.

In summary, the Court concluded as follows:


It was the duty of the alleged owner to identify its own goods and not for the administrators to do so. The Court held that the extent of the administrators' duty in relation to ROT goods was to permit supervised access to an alleged owner to enable it to identify its own goods and then adjudicate any claim that arises on the basis of all evidence supplied to the administrators. This was on the basis that the office holders came to the business as strangers.

HHJ McCahill QC (sitting as a Deputy High Court Judge) reasoned that to hold otherwise would not only be "totally unrealistic and practically unworkable but would also impose an obligation on the administrators which...the law [did] not demand".


As indicated above, BMG argued that MDM made a genuine and unequivocal demand for the return of the machines which the administrators had not complied with.

The Court rejected this argument on the basis that MDM's conduct was one of inactivity and passivity and that, as a matter of construction, the letter was not a genuine demand but "a mere posturing rather than an expression of a genuine desire then to recover the machines". In particular, the Court noted that MDM failed to identify the property in which it alleged it had retained title.

HHJ Judge McCahill QC pointed out that the ROT questionnaire was an important document as it asked the ROT Claimant to supply the information which would be most material to identification and location of the unpaid machines. However, the information provided by MDM was inaccurate and incomplete and suggested MDM still had further information to provide.

In conclusion, the Court held that the submission of the ROT questionnaire to the administrators did not constitute an unequivocal demand for delivery up of MDM's machines. In fact, the Court considered that MDM was perfectly happy to leave the machines in situ to aid the administration without any expectation of payment for the use because it believed it would do better out of a negotiated deal with the ultimate purchaser of Agora business than it would as an unsecured creditor in the administration or by the recovery of out-of-date and depreciated stock.


The Court further considered the failure by MDM to seek alternative relief in the administration.

In particular, it noted the failure by MDM to make an application under paragraph 43 of Schedule B1 of the Insolvency Act 1986 ("the Act") requiring the administrators to make a payment to MDM as an expense of the administration and as a condition of the continued use of the machines within the administration. The Court held that such an order could have been made under this provision.

It also considered that paragraph 74 of Schedule B1 of the Act (i.e. an application to Court by a creditor that the administrator had acted so as to unfairly harm its interests) afforded another legal remedy to MDM if it wished to complain at the time of the continued use of the machines by the administrators without payment. The Court held that the failure to pursue such other remedies undermined the Claimant's case that it did not consent to the gratuitous use of the machines for the purposes of the administration.

In conclusion, the Court held that the administrators had never converted or wrongfully interfered with MDM's machines and dismissed the claim in its entirety.


This is a helpful judgment for practitioners and underpins what is reasonably to be expected of an office-holder who the court recognised often arrives to a company in financial distress as a stranger. The Court considered administrators should be afforded a reasonable opportunity to deal with ROT claims and must be accorded "a wide measure of latitude" in the way they go about the exercise of their powers so as to achieve the statutory purpose. This is particularly relevant as administrators are often confronted with incomplete books and records and are required to urgently get to grips with the business and to get in and protect the assets with a view to selling the assets and/or business (and, if at all possible, to preserve goodwill and save jobs) in circumstances where they are also faced with pressure and conflicting demands from various types of creditors (e.g. landlords, ROT suppliers and employees).

Whereas the decision in this case firmly places the responsibility of identification of goods with the party whose commercial interest it is to recover them, practitioners should still be aware of the importance of careful drafting and communications with creditors. In particular, it is advisable for office-holders to communicate their standard procedure for dealing with ROT claims to creditors as soon as possible at the outset of their appointment and to ensure that they expressly set out what they will and will not do so as to avoid any confusion as to the parties' respective responsibilities.

As an aside, it will be noted that the administrators were able to recover some of their legal costs in the case from the ultimate purchaser of the business and assets of the company pursuant to an indemnity clause in the SPA. This serves as a useful reminder to practitioners to ensure appropriate indemnities and claw-back provisions are contained within their sale agreements.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Aziz Abdul
In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.