Defendant argued that the forced closure of Defendant’s shop caused by Covid-19 from March 2020 to June 2020, and the newfound Covid-19 restrictions affecting Defendant’s shop have made it impossible for defendant to use the leased premises for the purpose for which the lease in question was originally signed.
To succeed using a “Frustration of Purpose” defense, the defendant must first present concrete facts showing its attempts to conduct its business as usual given the changed circumstances. The defendant then must show that its failure to conduct business as usual is caused by a “reason never imagined, let alone foreseen by either defendant or plaintiff.” The Court added that this inquiry requires proper discovery and findings of fact, as it cannot be satisfied by mere legal memorandum or oral arguments alone.
The “Frustration of Purpose” defense centers on the foreseeability of the changed circumstances at the time the original lease was signed. In this case the Defendant Innisfree argued that the foreseeability factor is one that needs to be determined by findings of fact, as basing the inquiry on previously occurred events is impossible, as no similar pandemic has occurred at any other point during our present lifetimes. The court agreed with this argument, stating that a finding of summary judgment although not impossible, is premature until a fact-finding process enables the Defendant to make its case. The Plaintiff’s motion was denied without prejudice and restored to the Preliminary Conference stage in litigation.