Neighbors dog bit my dog through the fence. Who's responsible for upgrading the fence so this does not happen?

My wife and I moved into a new house. 80% of it is fenced in with a 6 ft high wooden fence, but 40 feet of the yard is only fenced in with metal rods that are about 5 ft high. There is about 6 inches between each bar, so our lab can get a little bit of her nose through the bars. The first day we were there, our dog ran over to see the neighbors Golden Retriever and instantly was bitten on her nose. She has an inch long gash on her snout, but is otherwise unharmed. My question is, who's responsible for getting a better fence in place, so this does not happen again? We've had seperate contractors come out and they want to charge $1,600 to finish off the wooden fence in our yard....this is $1,600 we can't afford now. Should the neighbor be responsible for part of the cost, or should they have to upgrade their fence, since they have the hostile dog? Since this has happened, we've tried to be friendly with the dog, but it will viciously come straight for the fence and ram itself into the fence. Our lab is only 8 months old and very friendly. She thinks the dog wants to play, but as owners we can tell the other dog wants her for breakfast. Please help!