Who is liable when my builder did some minor damage to my neighbour's car?

My builder (A friend) was using a grinder, and some sparks went onto my neighbour's bonnet and has caused a couple of sort of holes in the paint work. Small, but will probably cause problems if not sorted. The neighbour is also a friend and the builder has just gone on his own. It's very difficult as I don't want any bad feeling and I offered to pay, but my neighbour said no I'll pay. As I said I don't want any bad feeling and wanted to know who would be liable as I employed the builder to do the job.