A local authority official made a "perverse" decision when concluding that a 16th-floor council flat was suitable for a woman who suffered severe vertigo, judges have said.
Hayat El-Dinnaoui's husband, Fadi, took legal action against Westminster City Council after failing to persuade staff to offer them a flat on the ground or first floor, the Court of Appeal was told.
An official who dealt with the case thought that Mrs El-Dinnaoui would settle "in time", the court heard.
But three appeal judges ruled against the council, following a hearing in London on Thursday.
They said the official had not given "proper weight" to medical evidence when deciding that the flat in Maida Vale, central London, was appropriate.
Mr El-Dinnaoui had appealed after a county court judge ruled in the council's favour.