[TrishB]

My understanding is that legally speaking, your dog, as long as it is on your property, does not have to be leashed. Your neighbours were trespassing (fault #1), their dogs should have been leashed while off their property (fault #2). So legally - they don't have a leg to stand on.

However, as others have pointed out, it probably wasn't a good idea to let the dogs meet like that. It wasn't the best decision, but you were completely in your legal rights (legal doesn't necessarily mean moral or 'best judgement').

Now if their dog was injured, it's up to you if you want to help them out. i.e. if you pay for any vet bills, they'll take it as admitting guilt. However, to keep the peace with your neighbours (which lets face it, could be YEARS long), maybe a friendly phone call checking up on them would be in order.