Ok. Still not totally clear to me, maybe I need more coffee.
But;
There are a lot of "ifs"
In a nutshell:
Depending on what nameservers hisdomain.com is set to use, some possible scenarios:
If hisdomain.com is set to use yourdomain.com as it's nameservers, for hisdomain.com to work, you would need to be running actual nameservers on yourdomian.com. Otherwise, hisdomain.com should give a 404 (not resolve). If you ARE running a dns server on your domain, you would need to create records for hisdomain to resolve. Otherwise it should also give a 404 for hisdomain.com. If you ARE runnign nameservers on your domain, and you have created records for hisdomain.com, you would have total control of where his traffic goes. Keep in mind, that is assuming a lot. First, it assumes he is setting hisdomain.com's nameservers as your root domain name. It also assumes you have created records for his name. At least an A record. Now, if hisdomain.com is pointing to ns1.yourdomain.com, ns2.yourdomain.com, and you have no A or cname records for ns1 and/or ns2, OR no name servers running on those addresses (ns1.yourdomain.com &/or ns2.yourdomain.com), then hisdomain.com should not resolve, and give a 404 also.
So.... for hisdomain.com to actually resolve (correctly), several conditions must be met. First, you have to have actual nameservers setup and running on yourdomain.com's site. yourdomain.com must not be parked. You must have dns records setup on your server for hisdomain.com. If any of these are not true, hisdomain.com will not resolve. The only exception I could see would be that if your domain is parked, the A record might be pointing to a parking company that provides dns services on all their servers, across all addresses, and then the domain would probably just point to that parking company.