As you may know we run a small horse rescue and we've had similar things in the past to this and it's actually not so clear cut a situation as you might think, BUT the main thing is that possesion is 9/10ths of the law.
We had a horse "donated" again in a poor state, signed over to us by a woman. About 6 months later her ex husband turns up and says he's come for his horse. We took legal advice and it could have easily gone to court because prior to Feb last year I think it was, horses needed no passports, indeed if you don't move them anywhere I believe they still don't, so his lack of passport proves nothing either in our case or in yours. If your "owner" comes up with a bill of sale from someone saying that they actually purchased the horse from them then you are looking at the legal owner ( even if they got their brother to write it out). However, brazen it out like we did. Make sure they can't get access to ther horse, as if they take it, the police will NOT intervene and retrieve it for you, they'll tell you it's a civil matter.Just dig your heels in and whatever you do, don't sign a damned thing. Tell em you don't think they are the horse's owners and don't discuss it further. After a couple of S****y letter our bloke went away, so lets hope yours does too.
If this genuinely is the owner however, they would have had to give his passport to the people you had him off as anytime he is moved ( show etc) his passort is supposed to go with him, we ourselves have some on loan ( owners are undergoing long term medical treatment or unable to look after them at present for other reasons) and have their passports.
I'd just do nothing and let her make all the running, but DON'T sign anything.