I had something similar happen to me. As soon as the cat had been operated on for a fistula from an old wound, which I paid for, the neighbor came over and said thanks very much, now I'll take him back. I asked them to pay for the vet bills and they told me it had been my choice to have the cat treated. I told them to call the police and I would tell them that I'd seen the cat limping for a week from the infected wound, and that my vet stated that the cat's condition was that of a stray - fleas, worms, ear mites, bad coat, and injury. I then ran inside and called the vet and he reassured me that he would back me up. If you can afford a lawyer, I know I couldn't, then that's a good way to go. If you can't, see if the vet is ready to make a statement that in his opinion the cat is a stray. In my case, the neighbor didn't call the police, but they did get their children to stand at the fence and call me a cat stealer every time they saw me in the garden.

In the U.S., ownership involves providing food, water, shelter and reasonable care, and I should think it is the same in Canada. If this woman didn't provide these basic needs, and your vet should be able to assess this, then she can't say that she owns the cat. See if the vet can give an estimate on how long the cat had the untreated injury and infected eye.

Sometimes you just have to grit your teeth and fight for a cat.

Good luck and let us know what happens.