The Police Service of Northern Ireland will pay damages and costs to settle civil cases alleging security force collusion in the killings of four Catholics in Moy, County Tyrone, in 1992.

Bernadette McKearney, widow of Kevin McKearney, and the Fox family sued the Chief Constable and the Ministry of Defence for misfeasance in public office. Their barrister, Des Fahy KC, told the High Court on Tuesday that negotiations had resolved the two cases against the police. The settlement involves payment by the Chief Constable; claims against the Ministry of Defence were discontinued.

Kevin McKearney, 32, and his uncle Jack McKearney, 69, were shot at the family butcher's shop in Moy in January 1992. Jack McKearney died three months later from his injuries. In September that year, Charles Fox, 65, and his wife Teresa Fox, 53, were shot dead at their home in the village.

The Historical Enquiries Team (HET) reviewed both attacks. It found no evidence of collusion but concluded the RUC did not put in place adequate security measures that could have prevented the McKearney murders. The HET noted intelligence warnings of a general threat to Moy and a specific threat to the McKearney family, yet UVF gunmen were able to enter, attack, and escape. It named Billy Wright, the UVF leader, as suspected of orchestrating the murders.

In the Fox case, the HET concluded that two of the couple's sons were probably the intended targets. Charles Fox was shot four times and Teresa Fox five times. Nearby telephone lines were cut and the family dog was run down days earlier, an apparent attempt to prevent barking. The attackers smashed a window and entered the bungalow.

Solicitor Gavin Booth of Phoenix Law, representing the families, said it was the first time the state has acknowledged any role in the events. He said the families were denied a proper investigation and inquest for more than 30 years and called for the facts to be made public in court.

Mr Justice Rooney, addressing relatives in court, said he could not imagine the pain and suffering they had endured and described the victims as innocent and their deaths as brutal. He said he hoped the civil claims give them some closure.

Billy Wright, who later formed the Loyalist Volunteer Force, was killed inside the Maze Prison in December 1997.