For the record, a flying school CAN NOT withhold your logbook even if money is outstanding. This is private property and it is the pilot's own property once an entry is made. The records are another matter....they are required to be retained for 7 years (30 if the organisation is an RTO) however, the student has a right to copies of everything in that training record.
If another flying school asks for records and logbooks, they must be handed over and CASA can and will become involved if this request is not met.
Cautionary Note: Everything you do from hereonin should be in writing and email will suffice!