How does the innocent group co-owner protect themselves from this sort of debacle? I guess a written statement before a flight of who has what responsibilities.
... Which I thought was more common than perhaps it is (I have not rented fixed wing in more than 30 years). When I rented helicopters for training and solo flying, I would sign for the aircraft before I took it, and sign that I was returning it, which included the expectation that I would declare any defects.
From another thread, I understood that "booking out" was common in the UK, and I figured that was the same thing. Perhaps a less formal aircraft sharing arrangement would not have a signout system, but it would seem easy in institute, and remove any doubt beforehand.
The premise being that the "checkee" pilot is legally entitled to fly the aircraft in terms of their license (they just need the check for "club" rules), so they can legally sign out the aircraft as PIC, and carry a passenger - the "checker". They sign, they fly. If the checker feels a need to actually fly the aircraft, the checkride was probably a fail anyway.
A part of the checkride is for the checker observe how the checkee handles the role of PIC, which is more difficult to do if the checkee is not flying in that role.