Don't get depondent yet, you have just had a point of view from one persons opinion from the legal standpoint. You still have irons in the fire, planning regulations and the MP along with the surveyors report. You can't just grab a piece of somebodies land so don't despair.

You must at all times remain Calm with this woman, you and the wife should just ignore her totally and communicate via your solicitor, it will cost for each letter and phone call but in the long run your behaviour will not go against you, but in your favour. I guess you could use an independent third party to send her polite letters on your behalf.
Go for a long walk with the wife and scream at a few cows in a field then a country pub

Very good advice from Cleggy!
I took a couple to court last year and they actively tried to get me to go round and kick off so that they could tell the Judge what a nightmare I had caused them. Although I was sorely tempted, I resisted the temptation and communicated with them solely by letter (recorded delivery) and kept all the nasty texts and voicemails that they had sent me. Eventually, they made a false accusation to the Police of harassment and intimidation, and when the Police phoned me I insisted on going to the station to be interviewed. I told the story, showed them the texts, played the voicemails and the Police apologised for wasting my time!!!

The couple then had a visit and an informal chat about their behaviour!!!

By the time it came to court they knew they'd lost!!

As Cleggy has said, don't talk to her, communicate solely in writing and keep a diary logging everything that happens!!
The bottom line is that people who try to cheat and scam their way through life usually aren't particularly clever and with patience, persistence and determination you'll get the upper hand as this woman will trip herself up at some stage!!