30K sorry to hear your problem and so sorry you never got to see your friend before they passed away.
As for your issue I am not sure why you didn't get your Avios back.
An Avios redemption flight can be cancelled up to 24 hours before the outbound departure.
Once you have flown the outbound flight, you cannot cancel your return. More precisely, you can cancel it but you won’t get anything back! You can change the date and time of your return Avios flight, however, as long as Avios seats are available and you are willing to pay the £35 change fee.