What would make a snowmobile leak oil?

[comptech001]

My buddy and i rented snowmobiles and 8 miles in we reversed and parked to have some lunch. We noticed some blue fluid in the snow and were told that was oil. I wanted to drive it back to be safe and as i attempted to start the engine (non-electric start) the recoil cord just came out. I ended up towing it. upon arrival we opened the hatch and noticed the oil tank had a hole and melted in an area. The recoil cable looked burned off. The company accused my buddy of driving while holding the brake and accelerating at the same time. He does not remember doing this. Any ideas what could have happened...Want to avoid the $700 repair fees!