Aggressive neighbour cat

Our kitties have always been inside/outside kitties. We live in a very quiet neighbourhood, and in Australia it's pretty much the norm to let your cats out.

Since we moved house there has been this one nasty cat that continually comes into our yard and attacks Sashka. Our cats spend probably 18 out of every 24 hours inside, but they do go out for a bit of a romp for a couple of hours. They NEVER go further than our front yard, are never near the road - they don't even go into our backyard. Mostly they just prop themselves on the window ledge and watch the world go by.

I don't really know what to do about this cat. It's aggressive and it is continually in our yard. It patrols the back fence, too, and drives our dogs batty. Our landlords warned us about it before we moved in, saying it was a menace.

What to do? Anyone have any advice?

Since your cats are rarely outside this other cat has established your yard as part of his territory. Your cats are in violation and he acts on it.

Since your cats don't wander to far anyway, mabye consider building them a cat run? Especially if you have a garden, putting up little runs will keep your cats safe and still let them enjoy the outside.

Kittywalk Enclosures

For your situation, the cat run might work very well. Also consider using a cat repellent - the ultrasonic Cat Stopper or spray pepper/bitter orange on the fence area? This MAY help reduce the cat coming by. Be aware that if your cats go out at specific times - cats reduce agression by avoidance.
So if you set up a schedule and this other cat knows it, then they will
avoid each other - ie not be around at the same times...

As to the dog teasing - yep. Cats Loooove to do that.
again, the ultra sonic cat stopper and powders may be a solution -

critter repellent powder http://www.critter-repellent.com/

cat stopper http://www.critter-repellent.com/contech/catstop.html