Irresponsible owner of a 9 year old dog which was never house trained

I used to do dog boarding and dog sitting – it was the best job in the world. I loved every single one of these dogs (over 100 in the 1 year that I worked) like my own. I treated every single one of them with love and care.
One day I got a new booking – the application said for a 7 year female yorkie terrier. Well, apparently it turned out to be a 9 year old male – the owner could not even fill up the application properly. The initial pre-confirmation meeting went alright, apart from the fact she told us she took him to her vet because he was drinking more water than usual. I found it quite weird, since it was August, it was very hot, and the dog looked like it hasn’t been to the groomers in a VERY long while. The dog then proceeded to go urinate on a clean puppy pad I had set up for a puppy I was boarding and house training at the time. I was shocked (as the dog was waaaay older than a puppy) but the owner said he *sometimes* uses them when at home. Alright, sometimes was fine for me. Nothing else was told to us during the meeting).
The dog was dropped off in a rush with a bag of puppy pads and medications!!! I had no idea the dog was on meds. The owner literally just told me ‘he eats two spoons (Normal tablespoons of dry food) for breakfast and dinner, and he takes pills for his blood pressure. give him half a pill every day before dinner’. So i did. I followed the instructions. I found the amount of food she told me to give him to be extremely small, so I ended up giving him 3-4 spoons instead of 2 and plenty of treats during the day. To be honest, the dog was a big overweight…
The first thing that dog did when I brought him in is urinate EVERYWHERE! and I mean in every single room on every corner and table he found! It was awful! I honestly thought he did it only because it’s a new environment for him and he needs to get used to it. So I spent 2-3 bottles of odor destroyers to clean up the mess. EVERY DAY he would do it without exceptions.
After 3 days I’ve realised this dog is not house trained at all! I treated him as a puppy during house training: I would take him outside every single hour for at least 20-30 minutes and walk around on grass which is peed on by many other dogs. I would even take a spoiled puppy pad outside with me to encourage him to go outside! Guess what? During the 5 days he stayed with me he hasn’t urinated or defecated outside even once! NOT ONCE! Thats when I’ve realised that dog never had a normal lifestyle and has been living with his own urine and poop (because the amount of puppy pads his owner though would be appropriate to give me lasted for only 2 days. I can only assume she let him use it over and over again without cleaning).
But that wasn’t the only issue – the poor thing has never been socialized with any other dog EVER. He was completley terrified of dogs which were smaller than him! He would never come out of the hallway where I set up a bed and water for him and would try to escape when I was about to take all the dogs for a walk. He never acted like a normal dog unless he was sleeping in his bed. I felt extremely sorry for the poor little fella.
On the last day of his stay, after 3 of the hottest days we had that year, it was raining mad. I took all the dogs out for their walk as always. That dog was pulling on the leash behind me as always, I kind of stopped turning back to look at him since I know he won’t be peeing or pooping at all. Then out of nowhere he just collapsed on the ground. I have immediately picked him up and checked his pulse, his breathing, which was fine. But he would not stay up on his feet. In a panicking mode I ran home (5 minutes away) to drop off the rest of the dogs and immediately took him to my vet for an emergency. Neither me, nor the vet could figure out whe was wrong with him. i’ve spend over 2 hours crying in the waiting room before I was told he has passed…
To me, it was an extremely traumatising experience. I didn’t know what I did wrong, as I treated him like any other normal, healthy dog. His owner never claimed he was a special needs dog, that he isn’t house trained, and that apparantly he had some issue with his kidneys (that’s what apparantly the pills were for). Either way, nothing that I did could have made a dog collapse like that!
I’ve given his owner the money back for the booking, the insurance was gonna cover the vet bills and cremation cost. I didn’t even bother mentioning all the money I had to spend on cleaning supplies, I just let it go. But now, this woman is wanting me to pay her £2,000 because she had paid £1,500 for that dog when she bought him from a breeder. I’m shocked, mainly because that dog was purchased from a possible puppy farm (and that could explain why he was so sick). I’m also shocked I’m being asked for so much money, as she knew I’m a student with no income (the money I received for dog boarding all went on dog supplies, and it was barely anything after commissions).
She has complained to the council, which has visited me and agreed that I have done nothing wrong and I’m not at fault. It pissed her off and now she’s seeking to take me to court. I need some opinions, people? I know I’ve done the wrong thing by taking in a sick old dog, but I’ve had yorkie terriers which were 13 and 14 over before and they were 100% healthy and housetrained! I never thought anyone could be so irresponsible and never housetrain their dog, or never mention their illness in the initial meeting meeting, or not provide me with his vet’s info when she wanted me to only take him to his vet! Obviously I would have refused to take him in if she told me the truth, that: 1. He isn’t house trained and never was. 2. He was never socialised and never stayed with other dogs. 3. He can’t have even a 30 minute walk every day. 4. He isn’t allowed to have any wet food (she NEVER mentioned it at all). 5. She wanted me to keep him in either a crate (which I don’t have) or his own separate room AND still be with him 24/7.
In my opinion, she was delusional and never knew how to rise a dog, yet alone a dog which costs £1,500 which came from a possible puppy farm. I’ve stopped feeling guilt after the harassment from her side has started, and after people and my vet convinced me it was nothing that I have done. Opinions, please?
P.S. I never had the dog’s vet information and his application only had his name correctly – age and gender were stated falsely.