Tenant's mother threatening me with court

Other

One of our student tenants moved out in June, and we deducted £77 costs due to damage to the property. Her mother was not happy at the amount of the costs and telephoned me to complain.I agreed to refund £11 and said I would send her a cheque, plus receipts for items damaged.

However, before I could post the cheque, I received a letter from the mother accusing me of not complying with the law relating to the Tenacy Deposit Scheme dated April 6th 2007. She has demanded the full refund of the rest of the deposit, and threatened me with court action if she does not receive said money by 12th September, saying I would be liable for 3 times the original bond for each tenant. She has also informed the other tenants of my so-called 'non-compliance with the law.'

However, the deposit was paid in February 2007 and so does not come under the remit of the Tenancy Deposit Scheme.

I am now very concerned about the slur on my reputation as a landlord with the other tenants. What would be my best course of action with this woman?
And should I still refund some of the money to the student, or get this slur on my character sorted out first?