Siblings who were "tormented" by neighbours have lost a damages claim against a council which housed them next to the "known" trouble-makers.
Abuse including vandalism, assaults and threats took place between 2006 and 2011, the Supreme Court heard.
The court ruled Poole Borough Council had not "assumed a responsibility" to protect them from harm.
However charities and lawyers said the "landmark judgement" overturned councils' exemption from liability.
The pair were aged nine and seven when they moved to the Dorset estate.
Harassment started after their mother complained about damage to her car, the court heard.
'Attacks on home'
The older sibling, referred to in the judgement by the pseudonym "Colin", was "targeted for mockery" because of his severe physical and mental disabilities, judges were told.
The younger sibling, referred to as "Graham", ran away from home at the age of 10, leaving a suicide note, the court heard.
He and his mother were physically assaulted and suffered "attacks on the family home", judges were told.
They were not rehoused and the harassment continued despite court action against the perpetrators.
All five Supreme Court judges dismissed the claimants' appeal against an Appeal Court ruling in 2017.
They ruled it could not be said "that the claimants and their mother had entrusted their safety to the council, or that the council had accepted that responsibility".
The judges also struck out a claim arising from alleged negligence by social workers.
'Years of abuse'
Finally, they said the children could not be rehoused because "there were simply no grounds for removing the children from their mother".
The judges reaffirmed that local authorities could owe a duty of care to children, although they said "the existence of an assumption of responsibility can be highly dependent on the facts of a particular case".
In a statement, "Graham" said the ruling "glossed over the long-term failures of Poole Social Care to protect [them] from years of abuse, torment and terror".
His solicitor, Emma Jones, said the family was considering taking the case to the European Court of Human Rights.
The children's charity Article 39 and the Care Leavers' Association, which supported the claim, said the court had reinstated the possibility of negligence claims against councils.
Human rights barrister Adam Wagner said: "This is such an important decision and although the appellants lost on the facts, they have mostly won on the principle which will ensure that local authorities and other public bodies can be held responsible for failing their duty of care towards children."
Bournemouth, Christchurch and Poole Council, which replaced Poole Borough Council in April, said in a statement: "We are satisfied with the outcome of the hearing and the judgement handed down."