A top judge ruled on Monday the council would have to pay for Gerard Ryan's care out of public funds - even though he last year won a million pounds compensation for his plight.
The judge said Mr Ryan had been born so badly injured in June 1952 that he has always and will always require full time institutional care in a residential home.
Through his mother Margaret, he sued the Liverpool Health Authority alleging medical negligence and his claim was settled for pnds one million in June last year.
But the issue of how the costs of his institutional care were to be covered was left open and Liverpool City Council was allowed to join in as a party to the case in a bid to 'claw back' the cost of keeping him permanently in a residential home.
Mr Andrew Edis QC argued the city council was entitled to take into account the income generated by the million-pound capital sum, which is being administered by the court of protection, when assessing Mr Ryan's right to public funding.
But the judge dismissed the council's claim after a detailed trawl through what he described as 'some of the worst, if indeed not the worst, drafted and most confusing' regulations he had encountered.
He ruled the council was not entitled to take into account payments of income from the capital administered by the court of protection when assessing Mr Ryan's liability to contribute towards the cost of his residential accommodation.
The council's application had been resisted both by Mr Ryan's and the health authority's lawyers.
Had the council won its case, Mr Ryan's damages would have to be increased to take account of the contribution he would have to make to the cost of his institutional care. The health authority's compensation bill would thus have been greatly increased.
Mr justice Munby said the council had brought the case to court in pursuance of its statutory obligation to recover care costs from those who can afford to make a contribution.
Barristers for all three parties in the case agreed that the case raised issues of such wide importance that the court of appeal should now consider the case.
STRAND NEWS SERVICE