The three residents live either at Elmhurst Lodge or Hampden Lodge in Havering, but cannot be named because of their vulnerable states. All three suffer from varying degrees of dementia.
They sought judicial review of the council's November 2003 decision to consider putting out to tender the provision of its 'specialist dementia service' under one comprehensive package.
The residents' barrister, David Altaras, argued that the council's cabinet decision to 'go out to tender' amounted to accepting the eventual closure of all its four residential homes for the elderly - 'subject only to an acceptable tender being received'.
He urged the judge, Mr Justice Bennett, to order a judicial review of the council's stance, submitting that a lack of consultation left its decision 'fatally flawed'.
But, after a short hearing, the judge declined to give the green light for a full hearing, holding that it was 'not appropriate to allow these proceedings to continue'.
However, he left open the option for the residents' lawyers to return to court to reopen their case if the council fails to agree on a future consultation process after a key meeting scheduled for 22 June.
Mr Altaras claimed there was scant consultation with residents, in that there was no provision for special 'advocates' to explain events and put residents' cases before the decision on tendering was taken in November last year.
But the judge said Havering had already initiated its consultation procedures by that stage, while the disputed November decision was not a definitive ruling.
At that stage no decisions had yet been made 'about possible closure', he said. All that was resolved was that the council should begin the tendering process and consider a range of options at this 'purely hypothetical stage'.
STRAND NEWS SERVICE