There seems to be a lot of missing information here. In particular, the nature of the other driver's claim isn't clear.
However I'll try to answer this bit anyway:
"If the judgment is found not to be in his favour will he have to pay the court costs and any other costs incurred?"
1. Court fees: If the other driver wins his case, your friend would normally be ordered to pay the court fees that the claimant forked out to take the case to court.
2. Expenses: If the other driver has to pay travelling expenses to attend court, or if he suffers a loss of earnings through doing so, the court can order that your friend must reimburse him.
3. Legal costs: Assuming that the case is going through the Small Claims track, the normal procedure is that each side pays their own legal costs (such as solicitors' fees), irrespective of who wins.
https://www.judiciary.uk/wp-content/uploads/JCO/Documents/CJC/Publications/Other+papers/Small+Claims+Guide+for+web+FINAL.pdf