Need Advice

I am a freelance web designer and unfortunately have run into a problem with a client.

They do not want to pay my final installment as they are unhappy with the work: £1400 (I have already taken £200.00 for a part of functionality missing so it should be £1600).

With this in mind I have told them I will be taking the website down unless they pay me the amount in line with my payment terms.

They argue that I am holding the website hostage and are offering £500.00 and a discussion at a later date or the full amount and they will be taking me to the small claims court.

So what would the procedure be?

On a side note, their previous web designer had to take them to court for non payment.

Please find below some relevant T+C's which I believe will protect me:

2.) XXXXX reserves the right to revise and amend an initial quote to a customer where needed.

5. E) Once you make final payment you are signing off your project and agreeing that the work has been completed. Any changes requested once final payment has been made will have to be quoted for accordingly.

5. F) Only when final payment has been made do you fully own the website.

5. I) All invoices must be paid within 7 days of them being sent. If payment is not made you may incur a charge or disruption to your service.

All your help and advice would be greatly appreciated!!!