Claim for possession received but we've since moved out

[Beehive]

We received a claim for possession of a property (Accelerated procedure) from the court dated 18/02/2022, following our failure to leave a property as per the section 21 notice which gave us a move out date of 17/01/2022. We were acting under the advice of our local housing team who advised us to remain in the property otherwise we would voluntarily be making ourselves homeless. The housing team subsequently sourced us social housing and we left the property on 28/02/2022. This was before the deadline that our defence was due for submission, 09/03/2022. Despite the landlord now being in possession of the property he has not withdrawn his claim for possession. I contacted the court who advised the claim was still active and therefore we should submit our defence forms which we did, obviously stating that we were no longer living there and that the landlord was already in possession of the property. Our landlord has now contacted me privately by email asking me to agree to release our deposit from the Tenancy Deposit scheme to cover costs which he claims amount to £2500. I contacted the court again today and they advised they still haven't heard anything from the claimant. I'm reluctant to agree to any release of the deposit whilst the case is still active. If the landlord is already in possession of the property should this claim still be active with the court and could a court still make us liable to cover the legal costs or would we only be liable for the cost of the claim which I believe is £375, I would be happy to have the claim cost deducted from the deposit but want to make sure that he wouldn't then be in a position to make a separate claim for solicitors fees? Any advice would be much appreciated as I'm not sure what to reply to his email if I should at all.