Hi, I'm looking for advice and recommendations:

My tenants moved out on 31st December, I repaid their full deposit less agreed costs on 5th January. Later that afternoon I received an email from them containing a letter (Shelter template) stating that as I had not protected their deposit under s213 of the Housing Act, and as such they were giving me the opportunity to make them an offer to settle out of court or they would be taking me to court to claim between 1 and 3 times the value of the deposit.

As the deposit was £700, which has been repaid, as I understand it, that means the court could now award them between £0 and £1,400, or more worryingly, between £700 and £2,100?

Also, what is the likely outcome in this case? There seems to be very little evidence of past cases and outcomes.

If you need further info please ask.

Thanks in advance.