The way I understand the law is they use the "reasonable" man principle. Is he being reasonable by wanting to go court without trying your offer are you being reasonable with your offer?

Then there is reputation, I had a set of business cards returned because there is an dot which shouldn't be there, but when I asked the customer to show me the dot he couldn't. Then he started moaning about a white edge, hello most paper stock is white and a lot of other nonsense. In the end we paid him his money back and have put him on our blacklist of people we won't deal with.

It was a loss on that job but overall we all feel better that we won't deal with him again, and he hasn't been back.

Anyway I would try the pragmatic approach and offer him a say 10% refund and be prepared to up up it to 20%. Put that in writing so if it goes to court you show you are willing to accommodate him. Even though you feel you are right is it worth the extra hassle?