Thank you. The position here is that you have a contract with the booking company and you have a contract with the lady in question if she paid you money which you in turn paid to the holiday company. Providing you made available to her a copy of the booking terms and she understood the cancellation terms, she will be equally bound by them just as you are.
If she has decided not to go then it follows that she will only be entitled to a refund of the amount you would receive from the travel company less the cancellation fee. If it can be resold, providing this does not result in your sharing a room with a stranger which is not a reasonable request, then this is all well and good but you donot have to try to resell it on her behalf - you are not her travel agent. All you agreed to do is pay for her booking and you have fulfilled this service.
Unless you did not make available to her the cancellation terms which applied and from what you say you explained these very carefully to her, she is bound by them and is limited in what she can recover to the above - the cost of her portion of the holiday less and cancellation fee that applied at the time she requested to cancel however she must make a clear request to cancel and if she was dithering this does not amount to a clear instruction. You would have been within your rights to ask for a written instruction from her so you could argue that her instructions were confused as you describe and if you asked for a written instruction, she has not provided it.
In addition if she has not paid all of the costs of the holiday and you have evidence that she agreed to do so, you can consider a counterclaim against her for that sum owed to you in addition to defending the claim she has made against you on the above terms. You should have been sent a response pack with the court claim papers if she has already issued proceedings. You will need to consider completing the defence and counter claimform if you wish to do this and make sure you get it in within the 14 day deadline. If you need more time you can complete the acknowledgement of claim form to double the amount of time to respond to 28 days. If you miss the deadline she can obtain default judgement against you.
Does the above answer all your questions? If it does, I should be very grateful if you would kindly take a moment to click a rating for my service to you today. Your feedback is important to me. If there is anything else I can help with please reply back to me though