Thanks - that does help clear it up a bit. I think it's safe to say that I was supposed to pay them when I took delivery of the goods a couple of years ago - there was no invoice, but I immediately ran into trouble and couldn't pay.
BUT, when I received the letter of demand, I borrowed the full amount claimed in the letter of demand and paid it in one shot. The letter did not even mention the words "Interest" or "costs" - it demanded payment of the capital only, and I paid the capital in one shot, believing that that would be the end of the matter.
Now, after the fact, they have come back demanding I pay their costs, with an implied threat that they will claim the interest from me if I don't pay their costs. But neither of these were in the letter of demand, so is it not the case that if I satisfy the written demand in full that it's the end of the matter? Or am I still liable for amounts that they chose not to claim them but now want to?
Is it possible to sue someone for interest alone, even if the capital amount has been paid? I haven't taken advice from an attorney properly yet, but an attorney friend told me that there is no precedent for suing for interest once capital has been paid in full in response to a formal demand. But that was an informal discussion - hence me looking for a more informed opinion with you :-)
I hope that clarifies my question and concern a little.