We heard it on the news too. DH and I were amazed. As a parent if my child was invited to this childs birthday next year I'd be reluctant to accept.
How much notice would have been acceptable? ( I do think they were wrong not to inform the organisers) If the non attender had been ill that morning and organisers had been informed would they possibly have said "Sorry, you've past the deadline for telling us we'll have to charge you"
On another note, how can they say they were out of pocket ? If they booked and paid for x amount of children they paid no more than they originally planned 