A lessee claimed to have the right to terminate the lease agreement following several criminal events against the leased property that caused such property to stand unused for a year and a half. The lessee was willing to pay compensation but the lessor demanded that the lease continue to run until its end.
The Supreme Court held, that in case of frustration of the use of a property for the purpose of the lease due to circumstances that are related to the asset or the access to it the lessee may temporarily cease paying the lease payments or terminate the agreement. If the lessee ceased paying the lease payments the lessor may terminate the agreement after a reasonable time. This exception applies in cases here the lessee cannot use the asset due to external circumstances related to the asset or the access to it and the prevention of use can be legal and not necessarily physical.
In this case there was a material change of circumstances preventing the lessee the use of the asset. Under such circumstances the lessor’s demand that the lease continue to run until its end is ungrounded.