Landlord refuses to security deposit, need legal advice.

[Couchpotato]

https://ibb.co/6FwK1yr

Hi guys, our landlord is refusing to return our security deposit of $700 if we do not pay him $200+ (2 minutes later he changed his mind and claimed it's $300+) for this pvc leather chair. The leather is a bit torn at the seating area, he administered the tape himself. We have only been staying in this room for barely 1-2 weeks when the leather started tearing, unfortunately we did not think to take pictures or check the condition of all the furniture when we were moving in so we do not know if the leather already had some prior hidden tears. We continued using the chair for another 3-4 weeks as we didn't have time to buy a replacement. For now we have returned him the chair but he is constantly outside our door threatening to take our deposit if we do not pay him $300+, basically commiting extortion.

If we take him to small claims court at the end of our lease (we are unable to break lease early due to the T&C in the agreement) would we be able to force him to return our deposit in full? The chair is still fully functional except for that tear covered by the tape which does not affect it's function at all. The problem is that our agreement states that the deposit should be "refunded free of interest at the end of this tenancy, subject to any deductions by the landlord as may be necessary." Would that mean that he is free to claim that the chair costs an arbitrary XX amount and take our deposit?

[PNGMK]

SCT will only allow him to claim a prorated value of the second hand chair and maybe nothing at all. Tell him to bugger off and you'll see him in SCT.