A lease agreement for rent an event hall was terminated after the lessee did not pay rent for months and accumulated a debt of hundreds of thousands of shekels. The Lessee refused to make payments to circumstances related to the Covid19 epidemic.
The Court decided that the lease agreement may be terminated and the lessee may be evacuated. Israeli law grants an infringing party of a contract protection against an enforcement claim or damages, if three conditions are met: A. The infringer did not foresee the circumstances that occurred and could not have forseen them; B. Such circumstances have an impact on the contract to such an extent that the performance of the contract is impossible or fundamentally different from what was agreed upon; and also C. Such circumstances could not have been prevented by the infringer. Here, the leased property was used as an event hall and was leased for a long period of about 15 years. Even if the exceptional event of the Covid19 crisis and the exceptional and rare circumstances caused by it were not expected, the restrictions and limitations imposed were of variable scope and prevented the holding of the regular events only temporarily. Considering the long rental period, it cannot be said that this is a permanent frustration of the contract. The lessee made a unilateral decision to not pay rent for an extended period of time and at the same time continued to hold the leased property and derive certain profits from it (when at the time of cancellation her debts were approximately ILS 400 thousand and later eventually reached to ILS 1.7 million). The lessor cannot be forced to "accept" to the new situation or be deprived of its right to terminate the lease agreement and it may do so even when unexpected circumstances accord (such as Covid 19). Therefore, there is no other alternative but evacuate the lessee due to the termination of the agreement.