Six Surrey home owners and their legal team are celebrating a High Court victory even though they failed in the main aim of their action.

Nevertheless, the case has important implications for the 'care in the community' programme with its emphasis on moving mentally handicapped patients from hospitals to sheltered community housing.

The group of Camberley home owners opposed plans to house five Heathlands Mental Health NHS Trust patients in a three-storey detached house on their road. They feared the plan would result in a huge drop in the value of their homes – estate agents said the move would render the house next door to the earmarked property virtually unsaleable.

The residents said the plan constituted a breach of covenant over use of properties in the road and sought an injunction to prevent the trust going ahead with the plan.

However, in the High Court Mr Justice Chadwick refused to grant the injunction. But he also left no doubt that the legal door is still open for the home owners to attack the health trust from a different direction.

He made it clear that while the trust could not be ordered to drop the plan, it could be exposed to compensation claims under the Compulsory Purchase Act if the plan was carried through.

Residents could be entitled to seek compensation once the covenant, if proved binding on the health authority, was broken. And the compensation would relate to any drop in property values.

The residents' legal team – Jane Matthews, of Weybridge solicitors Guillaume & Sons, and barristers Tim Concannon and James Stoll, of Portsmouth Barristers Chambers – believe the decision clarifies a previously grey area of law.

It is a clarification which could have major repercussions for many other health authorities throughout the country where similar situations could occur. The team also thinks the Camberley case has paved the way for their clients to claim compensation running into "hundreds of thousands".

Matthews said: "This decision confirms that, if and when they move the patients in, it will be a very expensive day for the trust."

Concannon, a solicitor since 1981 who became a barrister in 1993, argued the case before Mr Justice Chadwick. He sees the ruling as one which could have a wider relevance than health authorities attempting to meet their 'care in the community' obligations.

The knock-on effects could be felt in a variety of areas ranging from local to central government, he says. He adds that the ruling could pave the way for judicial review proceedings challenging the way in which some authorities carry out their duties.

Concannon points out that health authorities are bound to act efficiently, effectively and economically. If the actions of an authority expose it to massive compensation bills, as is possible in the Camberley case, he foresees the possibility of its actions being challenged by way of judicial review.

On handling cases such as this, he gives a three-point warning: "You must always be conscious you are representing a group of individuals and keep your files rigidly separated. If one of the plaintiffs is legally aided, as in the recent case, you have got to always bear that in mind. And when it comes to apportionment of costs you need to establish ground rules from the outset, probably at a round table discussion with all the parties," he said.

With the likelihood of increased litigation in this field these are pointers which the profession would do well to bear in mind.