Dalrymple and Cabrera
[2011] FMCAfam 160
•8 March 2011
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| DALRYMPLE & CABRERA | [2011] FMCAfam 160 |
| FAMILY LAW – Property – de facto relationship – weight to be given to superior direct financial contributions by one party in eleven year relationship – considerations of various other contributions. |
| Family Law Act 1975, ss.90SF, 90SM |
| In the Marriage of Lee Steere and Lee Steere (1985) FLC ¶91-626 Russell v Russell (1999) FLC ¶92-877 Robb and Robb (1995) FLC ¶92-555 Pierce v Pierce (1999) FLC ¶92-844 |
| Applicant: | MS DALRYMPLE |
| Respondent: | MR CABRERA |
| File Number: | DGC 1893 of 2010 |
| Judgment of: | McGuire FM |
| Hearing date: | 18 February 2011 |
| Date of Last Submission: | 18 February 2011 |
| Delivered at: | Melbourne |
| Delivered on: | 8 March 2011 |
REPRESENTATION
| Counsel for the Applicant: | Mr Glover |
| Solicitors for the Applicant: | Goddard Elliott |
| Counsel for the Respondent: | Mr Finkelstein |
| Solicitors for the Respondent: | F.L.A. Partners |
ORDERS
That within 42 days of the date of these orders the applicant shall:
(a)Transfer all her right, title and interest in the following to the respondent absolutely:
(i)The property situate at Property O, [O] in Victoria and registered in the name of the parties.
(ii)All assets of the respondent’s business “[C]”.
(iii)The respondent’s [hobby equipment] including any current or prospective benefit of that interest.
(iv)All personalty and chattels in the possession of or under the control of the respondent as at the date of these orders.
(v)The Mercedes van in the possession of the respondent.
(vi)The balance of any bank accounts in the name of or to the benefit of the respondent as at the date of these orders.
(b)Be solely responsible for and indemnify the respondent in respect of the following:
(i)Any and all liabilities attaching to any of the assets to be retained by the applicant pursuant to these orders.
(ii)Any and all liabilities incurred by the applicant since separation in either joint names or in her name alone including any outstanding liabilities in respect of the rented property at Property G, [G] in Victoria.
(iii)Any credit or debit card liabilities in the name of the applicant.
That the respondent shall contemporaneously with the transfer and vesting orders referred to in paragraph (1) hereof:
(a)Sign all such documents and do all such things so as to allow release of monies held in trust on behalf of the parties being the proceeds of sale of a property at [D] in Victoria, to the applicant such to become the sole property of the applicant.
(b)Pay to the applicant a lump sum of $5,625.00.
(c)Transfer and/or vest all his right, title and interest in the following to the applicant absolutely:
(i)The applicant’s superannuation policies and entitlements with [M], [A] and [P].
(ii)All personalty and chattels in the possession of or under the control of the applicant as at the date of these orders including any motor vehicle in her control.
(iii)The balance of any bank accounts or like investments in the name of or to the benefit of the applicant as at the date of these orders.
(d)Be solely responsible for and indemnify the applicant in respect of the following:
(i)The Veridian Line of Credit/mortgage with Commonwealth Bank and provide the applicant with a release from her liability under that line of credit/mortgage.
(ii)Any and all liabilities attaching to any of the assets to be retained by the respondent pursuant to these orders.
(iii)The respondent’s Commonwealth Bank Mastercard.
(iv)Any and all liabilities incurred by the respondent since separation in either joint names or in his name alone.
(v)Any credit or debit card liabilities in the name of the respondent.
THE COURT DECLARES
A.That these orders are intended to finally determine the financial relationships between the parties with respect to Part VIIIAB of the Family Law Act 1975 (as amended).
IT IS NOTED that publication of this judgment under the pseudonym Dalrymple & Cabrera is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
DGC 1893 of 2010
| MS DALRYMPLE |
Applicant
And
| MR CABRERA |
Respondent
REASONS FOR JUDGMENT
Applications
This is an application for property settlement following a de facto relationship extending from 1998. Final separation occurred in June 2009 although there had been a number of previous separations and reconciliations.
There are no children of the relationship although both parties have adult children from prior relationships.
The applicant is employed as a [omitted]. The respondent is a
self-employed [omitted]. These were generally their occupations during the relationship.
Orders sought
The applicant, Ms Dalrymple, seeks an order distributing the net property of the parties as to 40 per cent to herself and 60 per cent to the respondent, Mr Cabrera. On an agreed pool of property this amounts to a cash adjustment of $185,000.00 in her favour with each of the parties retaining those items of property currently in his and her possession. She seeks a further order that Mr Cabrera release her from the mortgage obligation under the home they shared at [O].
Mr Cabrera seeks 90 per cent of the pool in his favour and 10 per cent to the applicant. It appears that the parties differ on the weight to be attached to the various contributions and, in particular, the superior initial contribution of Mr Cabrera.
Evidence
Ms Dalrymple relies on her trial affidavit filed 20 January 2011 and a sworn financial statement filed 7 June 2010. Two affidavits of the respondent filed 7 July 2010 and 1 February 2011 and a financial statement filed 7 July 2010 were read into evidence. Documentary evidence was adduced by the parties in the form of the following:
·taxation returns for Ms Dalrymple from 1999;
·letter from Commonwealth Bank in relation to line of credit;
·the last will and testament of Mr C; and
·profit and loss statements for Mr Cabrera’s business for the financial years 2005 and 2006.
Both parties were cross-examined as to their evidence. There were no other witnesses.
The issues
At the commencement of the hearing the Court was informed that the parties now agree the pool of property.
There is an issue as to the quantum of Mr Cabrera’s initial financial contribution. The applicant says he brought in approximately $120,000.00. Mr Cabrera says the sum was $150,000.00. There is then a major issue for the Court to determine the weight to be attached to that contribution.
The parties differ as to the periods of separation during the relationship and the effect of any contributions made during those periods.
Mr Cabrera says that the aggregate of those periods was approximately three years. Ms Dalrymple says they were parted for approximately
18 or 21 months of the eleven-and-a-half year relationship.
In about 2006 a block of land at [D] was purchased. Mr Cabrera says that he contributed $60,000.00 to that purchase. Ms Dalrymple disagrees and says that the purchase was made from borrowings.
The respondent Mr Cabrera claims a further contribution by way of contribution to the support of Ms Dalrymple’s two children who lived with the parties during the relationship.
The respondent argues a negative contribution by Ms Dalrymple. He says that Ms Dalrymple maintained a separate rented residence at [G] from the time of a separation in about November 2005. Ms Dalrymple maintains that rented residence until this day.
The respondent Mr Cabrera argues that an extra contribution by him towards renovations on the [O] home.
The respondent Mr Cabrera raises an issue about cash in the sum of $10,000.00 taken from a hiding place in their [O] home. He blames Ms Dalrymple’s daughter but suggests that the Court infer that Ms Dalrymple herself was involved or responsible. He further argues excessive withdrawals by Ms Dalrymple from the Veridian Line of Credit account and over and above her deposits.
The respondent argues that the cumulative effect of these contribution issues should give him an award of 90 per cent of the property pool.
Legal principles
The parties to this application were not married but lived in a de facto relationship. Part VIIIAB – Division 2 of the Family Law Act 1975
(as amended) (“the Act”) provides for alteration of property interests between parties formerly in a de facto relationship. The legislative process and course of consideration is similar to that under Part VIII of the Act in respect of married persons. That is, there is a long accepted multi-step process.[1]
[1] In the Marriage of Lee Steere and Lee Steere (1985) FLC ¶91-626.
The first step is for the Court to identify and evaluate the pool of property including assets, liabilities and financial resources. Superannuation interests and entitlements are to be treated as property for the purposes of the Court’s determination.
Secondly[2] the Court is to consider the contributions of each of the parties to the property pool including financial and non-financial and direct and indirect contributions to the acquisition, conservation and improvement of any of the property and including any contribution in the capacity of homemaker and parent.
[2] Section 90SM(4)(a) and (c) of the Act.
The third step for the Court is to consider the matters set out in s.90SF(3) of the Act including but not limited to the following:
(a) the age and state of health of each of the parties to the de facto relationship (the subject de facto relationship); and
(b) the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment; and
…
(d) commitments of each of the parties that are necessary to enable the party to support:
(i) himself or herself; and
(ii) a child or another person that the party has a duty to maintain; and
…
(g)a standard of living that in all the circumstances is reasonable; and
…
(k) the duration of the de facto relationship and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration; and
…
(r) any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account…
The Court is also to consider the effect of any proposed order upon the earning capacity of either party.
Section 90SM(3) provides that the Court must not make an order unless it is satisfied that, in all the circumstances, it is just and equitable to make that order. It is the justice and equity of the actual orders that the Court must consider.[3]
[3] Russell v Russell (1999) FLC ¶92-877.
The property pool
The parties agree the property as follows:
Property O, [O]
$715,000.00
Proceeds of sale of land at [D]
$131,349.00
[hobby equipment omitted]
$5,000.00
Business “[C]”
$10,000.00
Mercedes van
$15,000.00
Superannuation – Ms Dalrymple
$74,577.00
Veridian Line of Credit
($300,000.00).
Net property
$650,926.00
Contributions
Ms Dalrymple was not challenged in her evidence that at the commencement of cohabitation now some 13 years ago, she had a superannuation entitlement of around $12,000.00 and some furniture and contents.
Mr Cabrera asserts that he had cash “in the vicinity of $150,000.00” from the sale of a property from his former marriage. He says he introduced all of those funds to the purchase of the [O] property.
Ms Dalrymple says that the quantum was $120,000.00. She was cross-examined as to stating in a previous affidavit that the amount was $100,000.00. In cross-examination Ms Dalrymple candidly gave the following response:I can’t say that it wasn’t $150,000.00 – particularly with stamp duties.
Mr Cabrera has been consistent in his evidence as to the amount being $150,000.00. Following Ms Dalrymple’s apparent concession in her cross-examination, counsel for the applicant wisely did not pursue the issue in cross-examination of Mr Cabrera. Consequently, I am satisfied that Mr Cabrera made an initial contribution of $150,000.00 to the relationship which was put directly towards the purchase of the [O] property.
In early 2006 a block of land was purchased at [D]. The purchase price is not in dispute. Mr Cabrera, however, says that he contributed $60,000.00 towards the purchase price by way of $10,000.00 from the sale of a motor vehicle and $50,000.00 borrowed from his daughter which was subsequently repaid from a bequest from the estate of a friend. That person’s last will and testament was put into evidence corroborating the fact and quantum of the bequest.
Mr Cabrera says that the purchase was made and settled during one of the periods of separation between the parties evidenced, he says, by the contract being in his name alone and that the title was also registered solely in his name. The applicant concedes that there was a period of separation from November 2005 and that her name does not appear on the title. The issue is as to the contributions. In her affidavit material Ms Dalrymple says that the purchase was financed completely by borrowings. Again, however, in cross-examination Ms Dalrymple was completely candid and volunteered:
I thought it was [financed by borrowings]. I concede though that his evidence of contributing $60,000.00 is correct.
I am therefore persuaded that the respondent, Mr Cabrera, did make a further cash contribution of $60,000.00 financed by $10,000.00 from the sale of a motor vehicle (or its successor) which he brought into the relationship and from $50,000.00 firstly borrowed from his daughter but effectively from his inheritance.
Mr Cabrera asserts a further contribution in that he financially supported the applicant’s children in his household during the relationship with the applicant. He says that the respondent received child support from the children’s father but it was not contributed to the household. Such a “contribution” might ordinarily be considered under s.90SF(3)(r). The authorities dealing with this issue in respect of parties to a marriage would appear to be directly relevant. The Full Court in Robb and Robb[4] considered the issue of step-parent support within a family unit and stated at [81,547]:
Accordingly, in contributing to the support of these children the wife was merely honouring a legal obligation which she owed to the children, whilst the husband, in making his contribution, was acting essentially as a volunteer assisting the wife in the discharge of her legal obligations. Upon that basis, whilst we consider the justice of the case clearly required the husband's contribution to be taken into account under s. 75(2)(o), the same cannot be said of the wife's contribution. In making that contribution the wife was in no way discharging or assisting to discharge any legal obligation of the husband.
Turning, then, to ordinary notions of justice and equity, we are of the view that such notions do not call for any allowance to be made in the wife's favour, in the property proceedings between the husband and wife, because she honoured her legal obligation to maintain her own children of a prior marriage. We believe that a failure to make such an allowance would not offend the ordinary reasonable man or woman's notions of justice.
[4] (1995) FLC ¶92-555.
The applicant concedes that her three children variously lived with the parties during the relationship. Her son [X] lived with them for only the first six months. Her daughter [Y] until about 2002 and daughter [Z] for longer. Ms Dalrymple says that she received child support “intermittently”. The children’s father apparently moved to live in Indonesia and out of the jurisdiction of the Child Support Agency in 2002 or 2003. In cross-examination Ms Dalrymple says that she had previously been receiving $600.00 to $800.00 per month. When confronted with the suggestion that she did not contribute these monies to the household, Ms Dalrymple responded that:
I bought all the food and paid all expenses and looked after [Z].
Previously Ms Dalrymple in cross-examination said that she had paid the school fees for [Z]. This assertion was not further challenged.
The parties arranged their finances so that each had separate responsibilities. For example, one party would pay the mortgage and the other would meet food bills and utilities. The evidence of the taxable incomes of the parties suggests that Ms Dalrymple had a consistently higher income than Mr Cabrera throughout the relationship which is, of course, a contribution factor in itself for consideration. She clearly received child support although it is difficult to decipher on how regular a basis. No documents or other corroborating evidence was adduced. I am satisfied on the evidence that she contributed these monies generally to the household expenses and also met particular expenses such as school fees from her own income. She volunteered this information under cross-examination and was not further challenged. There is no evidence of the child support payments being channelled elsewhere or of an accruing of these monies by the applicant. It is clear, of course, that Mr Cabrera does not have the same legal obligation as does Ms Dalrymple to care and support her children within the household. Nevertheless, a party to litigation in this jurisdiction asserting a fact, including a contribution, has the onus to prove that fact on the balance of probabilities. On all of the evidence before me I am not satisfied that Mr Cabrera has made any direct, special or extra contribution within that household. He has met his agreed financial obligations for the household which seem to have been primarily the mortgage payments. The applicant’s children undoubtedly derived some benefit from these payments but this must be seen against the receipt of child support by the applicant and her greater income.
Mr Cabrera claims consideration for a contribution by way of renovations to the [O] property. He is a [occupation omitted] by trade and used his labours and skills to carry out some improvements to the property in 2004 and 2005. He concedes that much of the materials and costs other than his labour were paid through draw-downs on the Veridian Line of Credit with the Commonwealth Bank. He says that a part of the renovation was conducted during a period of separation. He employed a young man in his business for a period and he also apparently did some work on the home.
Ms Dalrymple claims that she assisted directly with the renovations. She cleaned the property. She did some painting and generally helped her partner. She says that they worked together on the weekends.
During his cross-examination Mr Cabrera suggested that
Ms Dalrymple had exaggerated her efforts but significantly he did agree that Ms Dalrymple’s major role was as homemaker and that she did so very adequately and also that she may have been carrying out this role when he was otherwise occupied with the renovations for at least a period of time. Such domestic activities, although indirect in nature, are every bit a contribution as those direct labours of the respondent.A committed de facto relationship is in many ways a partnership. The parties contribute in many and various ways and often according to their skills, talents and a separation of tasks. It is often, as in the matter now before me, difficult to quantify the various contributions of the parties in dollar terms. It is no accident that the legislation refers to both “direct” and “indirect” contributions. Similarly, there are contributions of a direct financial nature and non-financial contributions. In this matter there was no evidence of any value attributed to either Mr Cabrera’s labour expended on the improvements or, in fact, any value added by those improvements. The unchallenged evidence of Mr Cabrera is that at least some of his efforts were put in during a period of separation. Such a factor, of course, must be weighed against all of the other contributions of the parties both at that time and throughout the relationship.
Mr Cabrera argues a “negative contribution” by Ms Dalrymple in respect of her tenancy of the home unit at [G]. She has lived in that residence since November 2005. During periods of reconciliation both parties have lived in the [G] unit. The rent is paid by Ms Dalrymple. She gave evidence, which I accept, that she met the bond and initial rent from savings that she had accrued. Her further unchallenged evidence is that the respondent moved in his friend as a tenant in the [O] property on below market value rental for some of those periods of separation.
The respondent’s argument is that Ms Dalrymple maintaining the rented home unit in [G] was a drain on the finances of the parties generally and “drained the [O] home of financial resources”. The respondent in his affidavit says that he “pleaded” for Ms Dalrymple to surrender the rented home unit (presumably at times of reconciliation). The fact remains, however, that both parties received the benefit from living at various times in that home unit. This was the way they ultimately (despite the respondent’s alleged protests) chose to order their domestic arrangements. Whilst the respondent may have protested, he at times apparently acquiesced by moving in to that property. I am unable to find any negative contribution by the applicant in this regard.
The evidence is clear that there was no actual pooling of the parties’ incomes until the last 12 months of their relationship when
Ms Dalrymple began to pay her wages into the Veridian Line of Credit account. At this point, any suggestion by Mr Cabrera that this was an agenda by Ms Dalrymple in order to gain the benefits of an ultimate separation and property settlement is not founded on the facts before me. It is clear that she changed the method of receiving her pay at a time when the parties were together. I accept her evidence that this occurred at a time of change of employment or status of employment.What is clear on the evidence, however, is that Ms Dalrymple consistently earned more than did Mr Cabrera during the relationship and particularly in its latter years. Documents tendered into evidence show that Ms Dalrymple had a taxable income of $61,147.00 for the financial year ending June 2009, $58,067.00 for the year ending June 2008 and $54,977.00 for the previous financial year.
Mr Cabrera’s financial statements, including profit and loss documents for the financial years ending June 2005 and 2006, were put into evidence. There is no expenditure item for wages in the profit and loss statement for either year. The net profit, which is the best evidence I have, shows a figure of $12,967.00 in 2005 and $17,324.00 in 2006. Mr Cabrera agreed that these documents truly reflect his income from the business for those years and he had no other source of income. He then volunteered that he would consistently spend “$60.00 to $100.00 per week” on his hobby of [omitted]. He agreed that there was little financial return on this venture. It seems, therefore, that he is spending $3,000.00 to $5,000.00 each year on this interest. He agrees that his income by way of profit from the business has been fairly consistent over the years of the relationship excepting one particularly good year when his income slightly exceeded $30,000.00.
There is no evidence of the applicant having accrued any substantial savings during the relationship. It is open for me to find, therefore, that she expended her income generally for the benefit of the family unit. Indeed, the respondent alleges and suggests that the applicant may have benefited from the improper and illegal taking of cash savings secreted at their home. In cross-examination, however, he conceded that no blame could be attributed to the applicant although he maintains suspicions in respect of her daughter.
I am satisfied, therefore, that the applicant made a greater financial contribution during the relationship from the wages than did the respondent from the profits of his [business omitted] enterprise. The parties strictly divided their responsibilities for meeting ongoing expenses. There are allegations of excessive or improper withdrawals from the Veridian Line of Credit. On the evidence before me I am unable to find on the balance of probabilities that this has occurred. This was at a time that the applicant was paying her income into the Veridian account and withdrawing from that same account for her financial needs and obligations. There is no evidence of substantially greater withdrawals than deposits.
Conclusions as to contributions
As set out above, and not unusually in a relationship of more than
11 years’ duration, albeit with some breaks, there have been numerous and varied contributions by each of the parties. I am of the view that the significant contribution is that of a superior direct financial nature made by Mr Cabrera. On my findings he has contributed a total of $210,000.00 by way of his proceeds of sale of a former home and his inheritance. On the evidence those monies have gone directly towards the purchase of and accruing of equity in the now-agreed asset pool. Of course, there has been a lapse of time since those contributions and particularly in respect of the sum of $150,000.00. The property at Property O, [O], was purchased in late 1997. The purchase price was $220,000.00. The sum of $150,000.00 obviously provided significant equity in that property at the time. That property now has an agreed value of $715,000.00. There are proceeds of sale of other real property of approximately $131,000.00. There is a mortgage/Veridian Line of Credit as a liability of $300,000.00. The equity in real estate of the parties is therefore close to $550,000.00. Consequently, the significance of Mr Cabrera’s direct financial input should not be underestimated. The Full Court in the well known decision in Pierce v Pierce[5] at [85,881] say:In our opinion it is not so much a matter of erosion of contribution but a question of what weight is to be attached, in all the circumstances, to the initial contribution. It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife. In considering the weight to be attached to the initial contribution, in this case of the husband, regard must be had to the use made by the parties of that contribution…
[5] (1999) FLC ¶92-844.
I have found that on the evidence before me Ms Dalrymple has made a greater financial contribution during the course of the relationship. This is particularly the case in the latter years and is evidenced by the relative taxable incomes of the parties. She, of course, also had some superannuation entitlement at the commencement of the relationship although the greater majority of the current worth of $74,577.00 seems to have accrued during the relationship.
I find that both parties contributed to the renovations on the [O] property but accept as unchallenged evidence that Mr Cabrera completed some of these renovations during a period of separation from Ms Dalrymple. I note, however, that there is no direct evidence as to any capital appreciation on account of any of the renovations or improvements. I take into account that the applicant’s children were variously members of the household during the relationship whilst the best evidence is that Mr Cabrera’s daughter was resident for only a short period of time. Both parties contributed financially to the household and, given the different status of the parties in respect of legal obligation, there is in my view some small contribution by
Mr Cabrera.The direct financial contributions of $210,000.00 by Mr Cabrera, however, remain the outstanding factors in my view. The agreed net pool of property is now approximately $650,926.00. Whilst it is not proper for me to conduct a simple mathematical percentage calculation, the fact remains that Mr Cabrera has substantially made a direct financial contribution to this pool.
Taking into account and balancing the weight and effect of all of the contributions, I am of the view that there should be an adjustment to Mr Cabrera of 17.5 per cent from the net value of the property pool.
Section 90SF(3) factors
Neither party argued vigorously that there should be any adjustment in respect of the references under s.90SF(3) of the Act. Each of the parties remains in their employment and self employment. Whilst I have evidence before me of discrepancy in taxable income, I note that Mr Cabrera is self employed and perhaps has some of the benefits of that status. In any event, he has been self employed in this capacity consistently now for a number of years. His financial situation is such that he has been able to pursue his interest in [omitted] although, of course, I note that the [omitted] aspect of that hobby brings him some income. His business has at times necessitated him having an employee. I do not propose to make any adjustment on consideration of earning capacity between the parties.
Ms Dalrymple has some small superannuation entitlement of approximately $74,000.00. Her counsel submitted, properly in my view, that this simply be taken into account in the pool of “assets” and as an item of property to be retained by her. There is no indication that she has or will have early access to that entitlement. Mr Cabrera has no superannuation policy or entitlement.
Neither of the parties has the responsibility for the support of any other person and there is no evidence in proper form or detail before me of any new relationships for either party of financial consequence.
I propose to order that there be an adjustment of the net property pool, inclusive of superannuation, as to 67.5 per cent to the respondent
Mr Cabrera and 32.5 per cent to the applicant Ms Dalrymple.The agreed pool of property inclusive of superannuation is $650,926.00. The respondent is entitled to 67.5 per cent. I calculate this to be an entitlement in dollar terms of $439,375.00. The applicant would receive a dollar value of $211,551.00.
Mr Cabrera will retain the [O] property. There will be orders that provide a release for Ms Dalrymple under the mortgage/Veridian Line of Credit. My orders will have the applicant retaining the following:
Proceeds of sale of land at [D]
$131,349.00
Superannuation – Ms Dalrymple
$74,577.00
To be retained by Ms Dalrymple
$205,926.00
Consequently I calculate that there will be a further cash adjustment from Mr Cabrera to Ms Dalrymple of $5,625.00.
On consideration, I am satisfied that such orders and distribution of property is just and equitable with the respondent retaining the home in which he is resident together with his vehicles and business. It is proper that the applicant keeps her superannuation entitlement. The orders give weight and consideration to the initial superior contribution of the one party which remains evident in the major assets of the parties whilst acknowledging the various contributions of both parties during the relationship.
I certify that the preceding fifty-seven (57) paragraphs are a true copy of the reasons for judgment of McGuire FM
Associate:
Date: 7 March 2011
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