I think she is being very rude @Shaz51 .... but some people just accept when someone is that way and don't bother trying to push back against them.
It can leave you feeling very disempowered, but you do have some choices ....
You can voice to your husband, as you did, how upset you are, and expect him to get angry too, and tell his sister how you both feel, and ask her to cancel the dinner.
You can voice to your husband, as you did, how upset you are, and expect him to get gpangry too, and tell his sites that you are holding your own occasion for your husbands birthday, and inviting all the family, so she is welcome to join you, but it wouldn't be very sensible for her to hold a birthday dinner for him as well, considering that he is your husband and the occasion belongs to the two of you.
You can let your husband know how you feel, but not expect him to support you, because this has been going on so long he is not going to change in an instant.
You can choose not to attend the sister's dinner, giving one of several reasons .... you're upset that she made these arrangements without considering how you might feel ... you're not feeling well .... your mother isn't well and needs you ....
You can go along with the plans graciously but coolly .... accepting that it shouldn't have been done that way but the sister is an old dog now, and not very capable of learning new tricks, and you have better things to spend your time and attention, and emotional well-being on.
Hugs @Shaz51 .... we appreciate you here .... ❤️💕🌷💐💗💜❣