I put up a wire fence and asked my neighbour to do the same but this morning, to my horror, the two were locked and well on the way to making puppies. I certainly do not want him to be a father to a litter without going through the proper procedure.

If the bitch is going to have puppies how do I stand legally and financially?

Legal
DAVID FROST says:

You raise several interesting issues. Firstly, every dog owner is responsible for keeping their dog under control and is liable for the consequences if they fail to do so.

Your neighbour seems to be at fault here in allowing his dog into your garden without your permission.

Secondly there’s the issue of who owns the hedge or fence and who is responsible for its upkeep. Sometimes this is clear from the deeds of the house, sometimes it isn’t.

More often than not you are responsible for the boundary that lies on the right hand side of the property as you look at it from the road. If the fence is your responsibility and you own a dog you should certainly ensure it is dog proof.

Likewise your neighbour should ensure the same thing on his side. In practical terms the best thing is to talk to your neighbour and come to an amicable agreement about what to do. If the bitch is pregnant (and by no means all matings result in pregnancy) the least you could expect is a stud fee.

This is typically the sale value of a puppy. If both his bitch and your dog have a decent pedigree this could run to several hundred pounds.