So you have your answer then. If your mate asked a company / person to do a job and that job was not done to the standard expected of a competent, professional engine builder, the liability remains with that company but only if your friend can prove that nothing he has done after taking the engine back from the builder, or by supplying his own parts, has contributed to the damage now caused. What I will say is that if it was a well established reputable company, they would have no issues with re doing the work as their reputation is at stake. If it's a tin pot bunch if cowboys who know diddly squat and are playing at being engine builders, good luck, I don't think you will get anywhere.