It's a difficult one. Punctures or bodywork damage or something hit like a pothole and the resulting damage is always the driver at the times responcibility....this is a rule that is never changed with me and my mates. Something like the timing belt you would hope that the driver at the time would chip in as you where doing him a favour by letting hime use the car. If this chap doesn't offer to help I would just let it ride...I know it might suck...but the lesson here is don't lend him ANYTHING again. You say there is proof that he's been ragging it...put this to him with the times/places/people who saw this and see what he says. If he disputes this when there is genuine proof (the word of your other mates) then it may be time to part company with this chap and cut your losses.
I would only ever lend a car to someone who I would expect to take absolute care of it. If a failure like this happened to my car while a friend was using it, I'd certainly cover the costs myself, because I could be confident that the friend wouldn't have abused it. It sounds like you cannot be totally confident that your friend hadn't abused the car, so for you it's a grey area.
I only ever let one other person drive my cars as I know he will look after them. you need to be able to trust who evers driving them as like others have said, you bend it you fix it.
as alot of people said, if you bend it you mend it, i say this to all my friends that drive my cars and i do the same by them. although cambelt may have been partly his fault by abusing the car it cant be proven, so either pay out yourself and never lend it to him again or go halfs as it broke when he had the car.
If he's not offering to pay some of the cost (at least) then he's not your friend. End of. After all the favours you've done him, it's payback time. However, it's hard to say why a cambelt slipped... a bad stall could cause it, or maybe it wasn't quite tight enough? Some people are just out for themselves. It's up to you to decide whether he's one. If you lent me a 20vt rocco I'm damn sure I'd be out abusing it! I'd warm it up first though.
