Yes, you are right about the Denning case but I'm not sure it is relevant here.
This is surely about non-payment of wages due, rather than who you work for, and there are very few reasons in law where an employer can with-hold wages.
Reasons are:
for tax and NI
if it is specifically allowed for in the employee’s contract. There must be a specific clause in the contract which allows for that particular deduction to be made. The deduction can then only be made lawfully if the employee is given a written copy of that term in the contract before any deduction is made under it. Examples of this category can include deductions for Union dues or payments to a pension scheme
if the deduction has been agreed to in writing by the employee before it is deducted.
In addition the employer can deduct if
the worker has been genuinely overpaid
the employee took part in industrial action
a deduction made by an employer under a court order or an order from an employment tribunal.
So unless your contract with the agency specifically mentions something about damage to client's property incurred by your actions, I reckon it's a unlawful deduction of wages.
Try that on them.