As part of an upgrade of the country rail network,VicRail, a government - owned enterprise with responsibility for running the network, automated all signal boxes. After the automation, no manual signaling at level-crossings was possible. However, to minimise the risk in connection with driver-error or brake failure, VicRail installed "piston - breaks" on each train. These were designed to halt a train very quickly where the brakes has failed or where a train was on a collision course approaching a level-crossing. There was a slight risk of derailment. Note that CicRail, after conducting a cost-benefit analysis, rejected the installation of a sophisticated system of "catch points" that would have significantly reduced the risk of derailment. To instal the "catch-points" would have cost VicRail over $50 Million and taken two years to install. The "piston-breaks" cost less than $2 million to install and could be done very easily and quickly.

On 8 June 2015, Wang Li was travelling home to Geelong on a VicRail train when the brakes failed approaching the main level-crossing. The "piston-breaks" were activated but because the train stopped suddenly on a bend, several carriages were derailed. Wang Li was in one of those carriages. He was seated near an open window and was thrown from the train onto the embankment. He suffered horrific injuries. Many other passengers were also injured.

Police, ambulances and television crews were on the scene in minutes. Wang Li's old friend, Jerry Guo, was watching the disaster as it unfolded on the television. The television camera focused on a badly-injured person being rescued from the embankment. Jerry recognized Wang Li and saw the horrific injuries he had suffered. Jerry was traumatised and continues to suffer from post-traumatic stress disorder. After things settled down, both Wang Li and Jerry seek your advice about whether to sue VicRail in negligence.

Please advise:

1. Whether VicRail owes Wang Li and/or Jerry Guo a duty of care; and
2. Assume for the purposes of part (b) only that VicRail owes a duty of care, whether VicRail breached its duty of care?