Hi Sanjay,
Please be aware that it is likely that Stockfood and/or their lawyers monitor this site and therefore you should not make any admissions or discuss the details of your case here.
Secondly we cannot, by law, provide you with legal advice on which you conduct any litigation.
However we can give you some generic advice irrespective of your actual situation; if you need more specific advice you need to consult your own solicitor or Citizens Advice. Details of how to do this are shown earlier in this thread.
If you obtained the disputed image from a legitimate source and you can prove this, then this may provide a defence, and liability for primary infringement (if it exists) passes to the person who supplied the image to you. If this is the case, then you really need to get your own legal advice. Since this may take a while to sort out, simply acknowledge receipt of the Stockfood letter and inform them that you are seeking legal advice and that all further correspondence should be sent to your legal representative. On the other hand if you acquired the image by just finding it on the internet, then you may well be liable for primary infringement, unless one of the fair dealing exceptions applies to your use of the image. These exceptions include: for the purposes of criticism, review or quotation; parody or pastiche, or non-commercial research. However all of these uses (except parody) require that you provide sufficient acknowledgement of the source (usually meaning the author), which I suspect has not been the case with your use. Which then takes us back to the likelihood that you are liable for primary infringement, and assuming that Stockfood are the exclusive licensors of the image, they are thus entitled to fair recompense.
The amount they are asking sounds quite high for the use of a single image. You need to find the disputed image on their website and make a note of the actual fees they would have charged if you had entered into a standard agreement with them. Also make a note of the terms under which the image is available; you may see terms like 'royalty-free' or 'rights-manged' being used. The first term refers to a single one-off payment (usually for a fixed period of time) while rights-managed applies where the amount of the fee is determined by the quantity of views the image will get in your chosen medium (so for a print run, the size of the run, or for a website, the number of hits, etc). Then multiply the basic rate by the length of time you have been using the image to determine the actual fee you would have paid had you gone to Stockfood to source the image in the first place. Compare this amount to the £513 they are demanding.
If the latter figure exceeds the former by more than about 20% (to cover any administrative costs) then it is probably unreasonable and you should challenge it, and if necessary ask to go to arbitration over the amount due.
If there are any other circumtances which I haven't covered, but which you think may mitigate your liability over the use of the image, then you will almost certainly need legal advice. But make sure you first ask for an estimate of the likely cost of the legal advice, as this could quickly outstrip the amount being demanded, without any significant saving to you. Legal aid is not available for this kind of case, and it is most unlikely that you will be able to arrange a no-win, no-fee deal either (known more formally as a Conditional Fee Agreement or CFA). However Citizens Advice can provide advice for free, and if you do end up having to go to court, there is an
IP Pro-Bono unit which may be able to assist you in putting your case together. It is highly unlikely that the matter will go to court, unless you do nothing, in which case there is every possiblity that Stockfood will win a default judgment against you and the level of damages will go largely unchallenged because you won't be represented in the proceedings, plus you will then also be liable for certain court costs. Therefore, whether you deal with this yourself or use a solicitor etc, you must be prepared to continue trying to resolve the issue through negotiation.
Good luck!