The Motor Insurers Bureau is believed to have agreed to pay around £2m in an out-of-court settlement agreed on the steps of Dundee Sheriff Court.

The pair, who cannot be named for legal reasons, were injured by a driver who was uninsured and under the influence of drugs in the Whitfield area of Dundee in 1988.

Both still require treatment

The 11-year-old daughter now has the mental age of a five-year-old and suffers from psychological difficulties that will affect her for many years to come.

The damages claim began in April 1988 following an accident in which the mother and daughter were injured by an uninsured man driving a stolen car while under the influence of drugs.

Peter Wilson, the driver of the stolen vehicle, admitted motoring offences in 1988 and was sentenced to carry out community service. He has since died.

The mother was pushing her infant child in her pram when the car struck them, causing serious injury to both.

Over the past decade the family has been seeking compensation of £1.5m for the injuries sustained by the daughter and £750,000 for those suffered by the mother.

Pain and discomfort

The girl suffers from brain damage and will continue to suffer pain and discomfort. Her quality and enjoyment of life in her future years will be adversely affected because of the accident.

The mother was paralysed down her right side and is also affected by long-term injuries.

She requires nursing, cannot work, and is unable to cook for herself because of her injuries.

The defenders, The Motor Insurance Bureau, originally said the sum being claimed was excessive because the girl had been born prematurely and had suffered a haemorrhage of the brain.