Liverpool Council has lost a test case to "claw back" the cost of residential care for a client awarded £1 million compensation.
Gerald Ryan, 49, had been awarded the compensation after Liverpool Health Authority settled his claim that medical negligence at birth was responsible for his severe disabilities.
The council said that interest earned on the compensation should be taken into account when it assessed Ryan's eligibility for public funding for care.
But the high court ruled last week that the council was not entitled to take into account interest payments on capital administered by the court of protection.
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