Apply the law to the facts you have been given and advise Jarrod on whether Timaru Power Station is likely to succeed in a negligence action against him. In your answer, ensure you consider the damage to the power station, the penalty payment to Steel Smelting Limited and the medical expenses of the staff member.

Jarrod is a specialist manufacturer and supplier of equipment for power stations. Recently he sold a heat generator to Timaru Power Station. This heat generator is faulty and one night it explodes and causes a fire.

The fire causes $500,000 worth of damage to Timaru Power Station. It also causes a power outage, which results in the Timaru region having no power overnight. Unfortunately, this means that Steel Smelting Ltd, a Timaru-based factory, has to shut down production for eight hours. Timaru Power Station's supply agreement with Steel Smelting Ltd contains thefollowing term:

If Steel Smelting Ltd has to shut down production for more than an hour due to a power outage, Timaru Power Station will pay a penalty of $100,000 per hour for every hour of lost production.

Timaru Power Station have told Jarrod that they believe the fire and the associated damage was due to his negligence and they want him to pay:

$500,000 for the damage to the power station.

$800,000 to reimburse them for penalty payment to Steel Smelting Ltd.

$5,000 towards the medical expenses of one of their staff members who was injured in

the fire.

Jarrod does not want to pay Timaru Power Station any of this money. He has heard a rumour that Timaru Power Station was very understaffed on the night the heat generator exploded. He believes that if they had been fully staffed, the fire would have been extinguished sooner and would have caused less damage.