£90 MILLION LORD STREET CASE AND THE TROUBLED LEGAL RECORD OF THE CONSULTANTS ACCUSED OF UNLAWFUL INTERFERENCE

The blue-chip property consultants at the centre of the Isle of Man’s biggest civil legal case has previously admitted negligent valuation and been severely criticised by a public auditor over independence and conflicts of interest.

In the fourth instalment of our series about one of the Isle of Man's biggest court battles, we investigate the third defendant in the £90 million Lord Street case: Lambert Smith Hampton (LSH).

Few people have heard of LSH outside of the property world, but in Britain’s biggest commercial sector the company is a giant. LSH has got a premium reputation which it trades off to secure lucrative government contracts and big-ticket development deals. But this week The Armadillo is getting underneath the corporate gloss to investigate LSH's long history of controversial court cases that lurk beneath. We ask if the foundations of this bricks-and-mortar empire are as stable as clients, investors and customers are led to believe.

• Lambert Smith Hampton is the third defendant in the 90m Lord Street litigation engulfing the Isle of Man Government

  
  

• But LSH has previously admitted negligence and faced official conflict findings in other cases BEFORE the Manx tender row

  
  

• Developer Sondica alleges LSH was put under “undue pressure” to change its independent assessment of rival development bids — an allegation LSH denies

  
  

• But separate historic cases reveal established problems in LSH’s professional record

  
  

• LSH admitted negligence after valuing Wasps Rugby Club’s ground at £832,500 — a court later put the correct figure at £3.25m and awarded £2.4175m damages

  
  

• In another case, the Auditor General for Wales later found LSH failed independence requirements and mishandled a “clear and direct conflict of interest” during the disposal of publicly owned property

  
  

• The findings raise fresh questions over why LSH was chosen to provide supposedly independent advice in the controversial Lord Street tender

The property consultancy caught up in the Isle of Man’s £90 million Lord Street court battle has a history of serious professional controversies — including an admitted negligent valuation and damning official findings over conflicts of interest.

Lambert Smith Hampton, known as LSH, was brought in by the Isle of Man’s Department of Infrastructure to provide professional advice during the competition to redevelop Douglas’s former Lord Street bus station.

The firm now finds itself alongside the Department of Infrastructure and Treasury as a defendant in the long-running claim brought by developer Sondica Group Inc.

Sondica is seeking damages of £90 million after its consortium went from being the preferred bidder for the prime Douglas site to losing the project altogether.

The allegations against LSH in Lord Street remain contested. But an investigation into the firm’s past has uncovered similar failings.

This is not the first time questions surrounding valuations, independence and conflicts of interest have followed the blue-chip property consultancy.

And in two major previous cases, the problems were not allegations. They were established on the record:

£2.4 MILLION WASPS RUGBY CLUB NEGLIGENCE CASE

In 1996, LSH valued the site at £832,500. This valuation was used during a corporate restructuring, despite the land having residential-development potential.

Before trial, LSH admitted negligence. And a High Court Judgement states the firm accepted it should have used an open-market valuation, had failed to make proper planning enquiries of Brent Council and consequently undervalued the ground.

The court assessed the correct value at £3.25 million and awarded the Wasps trustees £2,417,500 in damages.

Unlike the live Lord Street allegations, this was a proven professional failure backed by LSH’s admission and a substantial damages award.

WELSH PUBLIC LAND CONTROVERSY

LSH acted as investment manager to the Regeneration Investment Fund for Wales, which sold 15 publicly owned property assets for about £21.7 million.

The Auditor General for Wales later found there had been no open and unconditional bidding procedure. The properties were not advertised nationally or internationally, while the marketing relied heavily on “soft market testing” within Wales.

The report also found LSH’s opinions of value were not based on valuations conducted to RICS standards.

At the same time, LSH was marketing the properties, advising RIFW on the sale, recommending whether an offer should be accepted and stood to benefit from a success fee.

The Auditor General concluded that LSH did not satisfy the RICS requirement for independence in relation to those opinions of value. Those findings matter because RIFW involved public assets and an adviser expected to provide professional judgment in a process where independence and best value were central.

LSH agreed to act for the purchaser as managing agent on eight South Wales properties while another element of the original transaction remained outstanding.

The Auditor General described this as a “clear and direct conflict of interest” and found LSH’s handling did not comply with its contractual obligations, professional standards or its own procedures.

Crucially, the auditor also said there was no evidence of improper conduct and no evidence that RIFW’s interests had actually been compromised by that particular conflict.

A later District Valuer assessment put the portfolio’s market value at £30.9 million, more than £9 million above the agreed selling price, although that did not prove the higher sum would have been achieved.

RIFW later sued LSH and another adviser for breach of contract and professional negligence. The case was settled in 2020 on confidential terms, with no admission of liability.

LSH also featured in Lord Dyson’s independent inquiry into the New Bermondsey regeneration scheme.

The inquiry recorded that LSH produced confidential marketing material and showed some of it to potential funding partners before it had been shown to or approved by the prospective client. It heard evidence describing the conduct as highly unusual, although it made no finding of professional misconduct.

Not every complaint against LSH has been upheld. RICS found “no case to answer” over separate Liongate House allegations in 2022, while a Northern Ireland Court of Appeal rejected another claimed conflict involving LSH receivers.

‘The Armadillo’ emailed detailed questions to LSH about these allegations. The company did not respond.