Daniel Hegarty was shot dead by a British soldier in Derry in 1972
Senior judges identified flaws in the conclusion reached that the ex-serviceman’s statement about the killing of Daniel Hegarty would be legally inadmissible.
Relatives of the 15-year-old victim are now set to press for the trial process to be reinstated.
Daniel was shot twice in the head after the Army moved into Derry’s Creggan area of the city in July 1972.
The killing occurred during Operation Motorman, when troops were deployed to clear so-called no-go areas set up by republican paramilitaries at the height of the Troubles.
In 2011 an inquest jury unanimously found that the youth posed no risk and had been shot without warning.
An Army veteran, referred to as Soldier B, was to be prosecuted for Daniel’s murder and the intentional wounding of his 17-year-old cousin, Christopher Hegarty, in the same incident.
But in 2021 the Public Prosecution Service announced that the charges were being dropped.
The decision to discontinue the criminal process came after the trial of two former paratroopers accused of another Troubles-era killing collapsed.
Soldiers A and C were acquitted of the murder of Official IRA man Joe McCann in the Markets area of Belfast in April 1972 after evidence deemed central to the prosecution was ruled inadmissible.
Deficiencies were identified in statements originally given to Royal Military Police in 1972 and to detectives from a legacy unit in 2010, including a failure to interview them under caution.
Daniel’s sister, Margaret Brady, mounted a judicial review challenge against the subsequent decision to discontinue the prosecution of Soldier B.
She claimed the PPS acted irrationally because different circumstances applied in Soldier B’s statement and interview with the Historical Enquiries Team (HET) in 2006.
Her barrister argued that Soldier B was fully aware that he was being questioned about the shooting.
Margaret Brady, sister of Daniel Hegarty, always vowed the family will not give up until they got justice for him
Judges were also told that the Director of Public Prosecutions took specialist legal advice as part of a careful decision-making process.
He then formed the view that the 2006 statement was impermissible because there had been no caution for any offence before it was taken.
However, the court found the circumstances were different from the facts in Soldiers A and C’s case.
Lord Justice Treacy confirmed that the decision to discontinue the prosecution of Soldier B cannot stand and is to be quashed.
Full reasons for the ruling will be given later.
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