The family of a man shot dead by loyalists in a murder linked to alleged security force collusion have settled a civil case against the police and Ministry of Defence.

Father-of-four Loughlin Maginn, 28, was killed by the paramilitary Ulster Defence Association (UDA) in his home in Rathfriland, Co Down, in August 1989.

At the time, the UDA justified the killing by claiming Mr Maginn featured in security force intelligence material they had obtained from an army base.

Two men later convicted of his murder were serving members of the Ulster Defence Regiment (UDR).

A Government-commissioned report in 2012 found that in December 1988 intelligence agencies became aware of a UDA plan to break into the army base to steal intelligence files on republican paramilitary suspects.

The report by QC Desmond de Silva said it was clear a decision was taken by the Royal Ulster Constabulary (RUC) not to prevent the break-in.

Solicitor for the next of kin Gavin Booth informed Belfast High Court on Friday morning that the family’s case against the MoD and the Police Service of Northern Ireland, the RUC’s successor, had been settled.

As part of the settlement the state will have to pay the family an undisclosed sum and their legal costs.

Judge Mr Justice Michael Humphreys said a settlement of a case before it reached court was always a “good outcome”.

Addressing relatives in the High Court, he said: “It can sometimes feel unsatisfactory in that you haven’t had your day in court, but from what I know of this case, and many others like it, it is a satisfactory resolution to resolve a case like this outside court, where you’ve got control of the outcome and you can take legal advice and reach terms which are satisfactory to you as a family and also to those who you’re suing, who have to enter into the bargain as well.

“And that’s an important part of our legal system. It doesn’t operate unless a large number of cases do resolve.

“I congratulate you on having taken that step. I’m sure it wasn’t an easy one to do but I’ve no doubt that it was the right thing to do to resolve your case.”

The family are campaigning for a fresh inquest to fully examine the circumstances of Mr Maginn’s murder.

Outside court, Mr Maginn’s daughter Grace said the murder had never been “adequately or effectively” investigated.

“In 33 years, no police officer has ever approached our home to offer us any information on this murder,” she said.

“We are calling for a fresh inquest to find out the truth.”

Ms Maginn added: “No family should ever have to suffer this long for truth.

“Today marks a significant milestone in our family’s journey for justice. Whilst this settlement by the police and the Ministry of Defence offers some comfort, it will never forgive the actions of those who entered our home that night nor the agents of the state who sent them to kill our daddy.”

Mr Booth, of Phoenix Law, said: “Our clients are delighted that today the PSNI and MoD have finally settled their case which has been ongoing since 1992.

“Today should mark a significant milestone in the family’s journey for justice for the murder of Loughlin Maginn, in Rathfriland in County Down.

“Whilst some of the truth is now known as to what happened to Loughlin Maginn, many questions remain unanswered and many of those responsible have been allowed to escape justice.”