Can I keep deposit against £8000 Legal Costs owed?

I shall be most grateful, if you could kindly shed a light on my situation. I have a case, where I just evicted a tenant successfully. The tenant has paid all rent and there is nothing outstanding in relation to arrears and the property has been left in a reasonably clean condition.

Now, the situation I would like to highlight, where we had to go through a full day court hearing, the tenant was represented by a “Legal Aid” Solicitors firm and accordingly he had the benefit of a barrister. Similarly we instructed our barrister and all costs amounted to around £8000. As you may or may not be aware as he was legally aided he had immunity against any costs being awarded against him however fortunately the Solicitors in question failed to apply Legal Aid on behalf of his wife who was a joint tenant on tenancy agreement, as she did not have any immunity against costs, the Judge awarded the whole costs against her.

Now the tenants in question have been formally evicted by County Court Bailiffs however the tenants have now requested that we return their deposit of £1700 in full as they have been up-to-date with their rent and the property has been left in good condition.

I would like to draw your attention to following clauses of tenancy with exact wording:

3.1 The tenant shall pay the landlord on the signing of this agreement a deposit of £1700 which shall be retained by the landlord as security for the performance of the tenants obligations and shall normally be payable to the tenant within 28 working days after the end of tenancy and then without interest and after deduction of any sums required to compensate the landlord whether wholly or in part for any breach of obligation of the tenants part.

3.2 The deposit will be paid back as long as all the rent and bills for the property are paid. If they are not the landlord may take from the deposit any rent legally owed or any other money legally owed. It can also be used for reasonable compensation if you have broken any of your agreements, or the reasonable cost of making good any damage which is not caused by fair wear and tear. The landlord is able to keep the deposit until you have produced satisfactory proof that you have paid the utility bills (electricity, gas, phone & water) for the property. If you fail to do so the Landlord may pay any charges outstanding from the deposit. If we cannot agree amounts for any breach, the matter will be decided by the County Court.

Now my question is- please see clause 3.2 (2nd line )” or any money legally owed” falls under the context where I can use deposit amount held by us against money owed by tenant as aforementioned?

The money is protected by Deposit Scheme and both parties are entitled to free adjudication service.

Any input will be much appreciated.

Simon

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