Landlord refuses fixing structural issues - breaking tenancy agreement

My landlord refused to fix water heater despite the clause on the tenancy agreement that all structural issues are fixed by landlord, and left us 3 months with no hot water. He fixed it after all, but only when I notified her of breaking the agreement. Still though I am going to stop paying the rent for two months and told her to regard two months deposit I placed as these two months rentals. She threatened me she will file a court case. I understand that since she failed to abide by the agreement clauses, I have right to break the lease earlier. All comments will be appreciated.