A schoolgirl's action for damages over injuries sustained in a car crash, in which her sister and friend were killed, is to go ahead in the High Court against the Motor Insurance Bureau of Ireland only.

This follows a settlement of the liability issue in the case of Faith Varden Carberry.

She was seriously injured when her mother, who was uninsured and banned from driving, crashed into a clay embankment outside Edgeworthstown, Co Longford, in November 2007.

Faith was seven years old at the time of the crash in which her six-year-old sister Ava and her friend Michaela Logan were killed, while another child was injured.

Her mother Mary Carberry, an alcoholic, was later sentenced to six years in prison with two years suspended in relation to the incident.

In the High Court yesterday, after several hours of settlement talks, Senior Counsel Liam Reidy told Justice Iarfhlaith O'Neill the issue of liability between the MIBI and Faith's father Thomas Varden, the owner of the car, had been settled.

He said the main case of assessment of damages could be adjourned for three weeks.

Mr Justice O'Neill said he was very glad the parties had reached agreement in what was a difficult case.

Faith, through her grandfather Anthony Carberry of St Mel's Road, Longford, had sued her father, her mother Mary of Clonguish Court, Newtownforbes, Co Longford, and the MIBI.

It is claimed that on 26 November 2007, a car being driven by Ms Carberry was caused to be crashed at or near the Old Dublin Road in Edgeworthstown.

As a result of the incident, Faith was taken to hospital after her cervical spine had been stabilised.

She later underwent surgery and was transferred to Our Lady's Children's Hospital in Crumlin where she was treated in a spinal cast for about ten weeks.

It is claimed Faith suffered severe psychological trauma and upset and she attended a child psychologist for three months after the incident.

Mr Varden, the court had heard, did not deny he was the owner of the car but claimed the car was being driven by Mary without his authority.

Judgement against her has already been obtained in the case.

In his evidence, Mr Varden explained that, when Mary was put off the road, she put the children on the phone to him saying they were cold and wet walking the one-and-a-half miles to school.

"It pulled at my heart strings. She was seeking for me to provide transport, purchase a car and somebody who was insured and had a full licence would drive it," he told the court.

He said he did not want to do it but the children would come on the phone saying they were cold and wet.

He said Ms Carberry was in Alcoholics Anonymous and seemed to be turning over a new leaf.

He said he bought a car for €14,000 but she was banned from driving so somebody else would have to drive it.

He later learned the car had been insured and Mary Carberry had signed his name to a cheque.

On the night of the crash, he said he got a phonecall from Mary.

"She said Ava was dead and she thought Faith was dead too," he said. He said when he got to the hospital he discovered Mary had been driving the car.

“I was angry. I am still very angry. No way would I have given the car to her if I thought she was going to use it that way. I trusted her," he said.