Well, sounds like, from the limited info you've given us here, that the friend's site (subdomain) may be in violation of the AUP even with its recent revision.
Because you are the one paying for it (the hosting package) YOU are the one at risk of suspension or termination. That's reason enough to tell him to get his own package!
But to answer the question that you posed: No way to limit space constraints on a subdomain.
I suggest you review the Terms of Service and Acceptable Use Policy for the hosting account here at TCH and make sure that you are not at risk...and if you are, that's the perfectly polite way to tell your buddy, "Sorry, dude. Ya gotta go."
Whip