When a person is injured in a motor accident that is not their fault, a claim will be brought against the other driver and met by that driver's insurance company. In such circumstances, a special regime applies to the legal costs involved, such that the normal rule that the loser pays the winner's legal costs does not apply if the claim fails. This is called 'qualified one-way costs shifting'.

When the other party is an uninsured or unidentified driver, a different approach is taken. In this case, a claim is made against the Motor Insurers' Bureau (MIB), which is a body funded by the UK motor industry to provide compensation in such cases where the accident occurs in the EU or another subscribing state, provided the injured person resides in the UK.

In a recent case, a claim was brought against the MIB by a man who had suffered an accident in France which left him paraplegic. The other driver involved was never identified.

The injured man brought his claim outside the time limit for such claims and it was therefore rejected. This decision was appealed all the way to the Supreme Court, which held that the claim could not proceed as it was barred by statute.

That then left the issue of the massive legal costs of the case. The High Court had ruled that since the claim was not a claim for damages against the MIB itself, the injured man should be liable for 85 per cent of the MIB's legal costs.

The Court of Appeal overturned that ruling, however, concluding that the principle of 'equivalence' would be breached if 'the rules relating to the recoverable costs in a claim against the MIB are less favourable to a claimant than the rules relating to the recoverable costs in a claim against an insured driver…' and that the claim could be characterised as a claim for personal injuries.