Poor Bella. It must have been terrifying for you both. I experienced something similar once when Paddy was pursued by a dog visiting our neighbour. The dog nearly had him, but our dog intercepted it, and a dog fight ensued in which I was also bitten. Because of the diversion our dog created, Paddy was able to get away to safety, but we all received a bad fright, including the dog's owner who was apologetic (but who knew nontheless of the dog's propensity to chase cats and yet still refused to muzzle the dog when it was out in public)
I know how difficult this can be, but I think given that the dogs have a history of getting out, I would be looking to bring this to the attention of the Dog Warden, rather than approach your neighbour direct - if you do the approach your neighbour, and subsequently have cause to go to the Council, they're more likely to suspect you of reporting it, and that could result in more unpleasantness for you.