If he had signed up and paid at that price. The contact was active.
You had 2 options at that point.
- Cancel the contract and refund the client 100%
- Provide the required services
You decided to pick an option that was not 1 or 2. I did hear rumors about you wanting to Sell up as you were unable to pay DC bills, I did not belive them. But I think this cheap way of keeping the clients money when you know you are in the wrong, goes along way to prove them rumors true, something is amiss Mark - And you of all people know.
Just think of this as the other way. If you was the client.
Hell, i'm sure if you was in his possition you would have posted on every single forum on the internet about how they scammed you, until you got your refund.
Thats me out. I hope the client gets refunded. Shame on you Mark.
EDIT:
Just seen your edit.
Your mistake, by the words of your terms of service, makes YOU in breach of contract. As I stated - You could have canceled that contract, but you decided to "Edit" it, which without the clients consent, cannot be done. Therefore, you should have bitten the bullet, and paid the extra this month, and THEN raised the price next month (as per your TOS, a contract lasts a single month, and is renewed every month). Or canceled the contract and refunded his money.
EDIT 2:
I offer no refunds on servers unless I (we) are to fault. You are in blatant breach of contract Mark. No matter how you look at it, its illegal, and ethically WRONG. The client cannot use the server because it was not how he ordered it, therefore, you are to blame, and YOU are in breach of contact, therefore, the LEAST you should do, is cover the extra costs for 1 month, and then charge extra, or refund.