You may want to look into the dog control laws in your area.

If there are leash laws, the dog off lead is automatcally at fault.
Sometimes the leash law may not be affective as long as the dog is in their own yard.

If there are no leash laws and it happens on the dogs property (your dogs leash is long enough for your dog to be in the other dogs yard, even just a few inches, like on the grass) your dog is aat fault.

If there are no leash laws & it happens on neither dogs territory than I'm not sure. It would probably be taken to court where I hope the judge would see that your dog would be in favor because of the leash.