Cousin Suing Me

October 2020 I worked with my cousin doing commercial cleaning under the table. The owner of this company is also a relative.

Nov 2020 my mom finds out my cousin has been lying about hours and who’s working (pocketing money)

I contact the owner I let her know my time sheets I subpoenaed the office for camera footage thus showing I was alone working

Owner comes to my house with the settlement and an agreement to forget and move on.

My cousin didn’t like this and filed to sue me for toxic language, lying and defamation, claiming she paid me to shut me up but is seeking the refund through court however she wasn’t even the one that paid me out.Wants money for wage loss even though she won’t provide a T1

How would one approach this