Harsha Aggarwal v Vision Asia Pty Ltd
[2014] FWC 4479
•10 JULY 2014
[2014] FWC 4479 |
FAIR WORK COMMISSION |
DECISION |
Fair Work Act 2009
s.394 - Application for unfair dismissal remedy
Harsha Aggarwal
v
Vision Asia Pty Ltd
(U2013/17859)
VICE PRESIDENT HATCHER | SYDNEY, 10 JULY 2014 |
Application for costs.
Introduction
[1] In a decision issued on 14 May 2014 (Decision) 1, I dismissed an application made by Mr Harsha Aggarwal for an unfair dismissal remedy on the basis of a finding that Mr Aggarwal’s dismissal was a case of genuine redundancy. On 28 May 2014 the respondent to that application, Vision Asia Pty Ltd (Vision Asia), made an application for an order that Mr Aggarwal pay its costs of the proceedings. Vision Asia has invoked two provisions of the Fair Work Act 2009 (the Act) in its costs application, namely ss.400A(1) and 611(2)(b).
Unreasonable act or omission
[2] The first basis upon which costs are sought is under s.400A(1), which provides:
(1) The FWC may make an order for costs against a party to a matter arising under this Part (the first party) for costs incurred by the other party to the matter if the FWC is satisfied that the first party caused those costs to be incurred because of an unreasonable act or omission of the first party in connection with the conduct or continuation of the matter.
[3] Vision Asia submitted that the rejection of two offers of settlement by Mr Aggarwal constituted unreasonable omissions on his part which caused it to incur costs. The first offer was made on 20 February 2014 at a conciliation conference conducted by the Commission. However Vision Asia has acknowledged that the Full Bench decision in McKenzie v Meran Rise Pty Ltd t/a Nu Force Security Services 2, which has been applied in decisions under the Act3, is authority for the proposition that offers of settlement made in conciliation conferences cannot be relied upon on the question of costs. In McKenzie the Full Bench said:
“[12] An offer of settlement made in conciliation proceedings is by its nature made on a without prejudice basis. It is inappropriate that an offer made in those circumstances should be taken into account in a costs application unless the offer is subsequently repeated on an open basis. It has long been accepted that positions taken in conciliation are without prejudice to the position to be taken in arbitration. The protection afforded to participants by this principle is an essential feature of conciliation proceedings.”
[4] It may be that the above reasoning in McKenzie should at some stage be the subject of review at the Full Bench level. The conduct of conciliation conferences is a key element of the process by which this Commission manages its unfair dismissal jurisdiction. It is the principal opportunity which parties have to settle their matters before they go to hearing. That is particularly the case for the many unrepresented litigants in this jurisdiction, who cannot be expected to have any understanding of the mechanisms of Calderbank offers and the like. In that context, there may be room for reconsideration of the rationale of an approach which may give parties at conciliation conferences a licence to behave unreasonably by declining to engage seriously in the process and failing to properly consider reasonable offers of settlement without the risk of any adverse consequences later in the proceedings. I note that in the New South Wales unfair dismissal jurisdiction, conduct in conciliation conferences has never been treated as being immune from consideration on the questions of costs. 4
[5] However it was not submitted by Vision Asia that McKenzie was wrongly decided or that I should not follow it. Indeed, Vision Asia has (quite properly) not disclosed in its submissions or evidence what the offer was which it made at the conciliation conference on the basis that the principle stated in McKenzie applies (although I have become aware of the offers which were made at that conciliation because they are referred to in an email dated 4 March 2014 from Mr Aggarwal’s then solicitors, which was annexed to Mr Aggarwal’s submissions on costs). I consider that the appropriate course is to follow the approach taken in McKenzie, with the result that any refusal by Mr Aggarwal of an offer of settlement made by Vision Asia at the conciliation conference cannot be treated as an unreasonable act or omission for the purposes of s.400A(1).
[6] The second offer relied upon by Vision Asia was made in a Calderbank letter dated 6 May 2014. The offer was that Vision Asia would pay Mr Aggarwal a gross amount of $6,097.86, representing three weeks’ pay at his pre-dismissal rate of pay, less lawful deductions of tax. The offer required Mr Aggarwal to discontinue the proceedings and enter into a Deed of Settlement and Release in a form acceptable to Vision Asia including terms concerning mutual non-disparagement, mutual confidentiality and a release for the benefit of Vision Asia and its associated entities. The discontinuance was to be on the condition that each party was to bear its own costs.
[7] A critical element of the offer was that it remained “open for acceptance until 3.30 pm on 7 May 2014 after which time, it will lapse” (noting that the hearing of the matter, which occurred by way of conference under s.398 of the Act, commenced on 8 May 2014). In her affidavit sworn on 28 May 2014, Ms Lesley Maclou, a partner of the solicitors for Vision Asia, stated that the letter was “caused ... to be issued” by her firm on 6 May 2014. It is not clear from that whether the letter was posted or sent by some other means. The letter bears an address of Mr Aggarwal at Rosehill in Sydney. There is nothing on the face of the document which suggests it was emailed, although I note that in his submissions on the costs issue Mr Aggarwal appears to acknowledge that it was sent by email. However in his submissions Mr Aggarwal went on to describe the circumstances in which he first saw the offer as follows:
“I had just landed in Sydney on May 6th, 2014, to attend the Conference and as such had not even seen my email (as I had no internet connectivity) until the day before the conference (the offer response due date set by the Respondent) to see a $6,097.86 offer on the table, while I was trying to prepare for the conference. Clearly, this Second Offer was an after-thought designed to create an impression that I was being unreasonable when in fact the Respondent was unreasonable all along in the manner in which they approached a settlement of the case. As I was unrepresented legally, I did not understand the implications of receiving the Second unreasonable Offer right before the Conference.
Also, as the 2nd offer had already expired by the time I even got to see the offer, and that the FWC conference was on the next day, I had no choice but to continue preparing for the conference as the ... 2nd offer had expired at 3.30pm on May 7th, 2014.”
[8] Vision Asia’s submissions in reply on the costs issue did not put the facts stated by Mr Aggarwal in contest, nor did they suggest those factual statements could not be relied upon.
[9] Concerning Mr Aggarwal’s response to the offer, Ms Maclou deposed as to the following in her affidavit:
“The Firm did not receive a written response to this letter. To the best of my recollection and belief, at the commencement of the hearing on 8 May 2014 in the Fair Work Commission, the Applicant verbally advised that he did not accept the offer set out in the letter dated 6 May 2014.”
[10] The first sentence of the above passage is consistent with what Mr Aggarwal said in his costs submissions. The second sentence (assuming “at the commencement of the hearing” means immediately after the hearing commenced, not before it commenced) is not precisely accurate. The transcript of the hearing discloses that the hearing commenced, after the taking of appearances, with an inquiry from myself as to whether the parties wished to participate in further conciliation. The following exchange occurred with Mr Aggarwal 5:
“THE VICE PRESIDENT: Mr Aggarwal, from your position, are you taking an all-or-nothing approach or is there some compromise which you might be prepared to agree to which would allow the matter to be resolved without the need for a hearing?
MR H. AGGARWAL: With all due respect, sir, I'd like to be reminded about the possibilities. From my point of view reinstatement is what I'm seeking and that's what I would be looking for. So I don't know if that means that there is a compromise but from my point of view, if that's what's considered one, then - - -
THE VICE PRESIDENT: It's entirely up to you, but is reinstatement the only satisfactory remedy that you seek in these proceedings?
MR H. AGGARWAL: At this point in time, sir, yes.
THE VICE PRESIDENT: What do you mean "at this point"?
MR H. AGGARWAL: From my initial conciliation there was a window in time where I thought a financial compromise might be feasible but, given the amount of time that has passed since then and how my circumstances have changed and given the nature of this case, I think at this point reinstatement might be the only thing that I can settle for.”
[11] Counsel for Vision Asia then indicated that if the only relief sought by Mr Aggarwal was reinstatement, then conciliation would not have any utility. The following further exchange then occurred with Mr Aggarwal 6:
“THE VICE PRESIDENT: All right. Mr Aggarwal, you have heard what Ms Thew has said. I can understand why you would want to maintain your primary position but if you indicate to me there's no possibility of compromise, then it seems to me that conciliation would not be a useful course, but if you give some indication that there is a possibility of compromise – I'm not asking you to identify what that is – then I will undertake a conciliation.
MR H. AGGARWAL: I understand, sir. I think at this point in time it's most probably not likely that conciliation makes sense given the recent offer that I just checked yesterday. I was en route travelling to Sydney. It's even less reasonable than the initial offer was at the end of the first conciliation. Given the direction in which both parties are heading, I don't think that it would be useful for us to continue a conciliation point at this time.”
[12] The above transcript discloses that Mr Aggarwal did not in terms indicate a rejection of the offer of 6 May 2014. Mr Aggarwal instead indicated, when asked about his attitude towards the possibility of further conciliation, that he sought reinstatement and that in the light of the 6 May 2014 offer conciliation would not be useful. It may also be noted that his statements about the offer that “I just checked yesterday” and “I was en route travelling to Sydney” are broadly consistent with the factual statements made in his submissions on costs quoted above.
[13] In order to establish the jurisdictional foundation for an order for costs under s.400A(1), it is necessary for an applicant for costs to satisfy the Commission that the unreasonable act or omission upon which it relies actually occurred in fact. Here, that means that Vision Asia must satisfy me that Mr Aggarwal rejected, or failed to accept, the 6 May 2014 offer at a time during which it was open for acceptance. An essential element of this must necessarily be that Mr Aggarwal actually saw the offer before it lapsed, since a failure to accept an offer one does not know about could hardly constitute an “omission” let alone an “unreasonable omission”. This is particularly so given the very limited timeframe in which the offer remained open.
[14] I cannot be satisfied of this on the material before me. Mr Aggarwal has said that he did not see the offer until after 3.30 pm on 7 May 2014, by which time the offer had lapsed. I am entitled to accept his statement to that effect even though it was not made on oath or affirmation, since it has not been put in contest by Vision Asia and appears in the circumstances to be entirely credible. 7 There is certainly nothing before me from which it could positively be concluded that Mr Aggarwal saw the offer prior to its expiry.
[15] Further, there is no basis to conclude that Vision Asia did or said anything subsequent to the letter of 6 May 2014 to indicate that offer was open to acceptance at any time after 3.30 pm on 7 May 2014. The transcript of the hearing does not contain any such indication. Vision Asia did not suggest that any such indication had been given. It may well be inferred from the transcript that, had the offer been extended or proffered a second time, it would not have been accepted by Mr Aggarwal. But that is an entirely different thing from saying that Mr Aggarwal refused or failed to accept an offer that was open to him to accept.
[16] I am not therefore satisfied that the alleged unreasonable omission upon which Vision Asia relies for the purposes of s.400A(1) actually occurred. That being the case, there is no power to make a costs order under s.400A(1).
No reasonable prospect of success
[17] The second basis upon which Vision Asia seeks its costs is under s.611(2)(b) of the Act, which provides as follows:
(2) However, the FWC may order a person (the first person) to bear some or all of the costs of another person in relation to an application to the FWC if:
…
(b) the FWC is satisfied that it should have been reasonably apparent to the first person that the first person's application, or the first person's response to the application, had no reasonable prospect of success.
[18] The principles applicable to the construction and application of s.611(2)(b) were succinctly stated in Baker v Salva Resources Pty Ltd 8 as follows:
“The concepts within s.611(2)(b) “should have been reasonably apparent” and “had no reasonable prospect of success” have been well traversed:
● “should have been reasonably apparent” must be objectively determined. It imports an objective test, directed to a belief formed on an objective basis rather than a subjective test; and
● a conclusion that an application “had no reasonable prospect of success” should only be reached with extreme caution in circumstances where the application is manifestly untenable or groundless or so lacking in merit or substance to be not reasonably arguable.”
[19] The decision in Baker is consistent with the approach taken by the NSW Court of Appeal concerning the expression “without reasonable prospects of success” as it appears in Div.10 of Part 3.2 of the Legal Profession Act 2004 (NSW), in that the Court has equated that expression with the meaning “so lacking in merit or substance as to be not fairly arguable” and has described it as a concept that falls appreciably short of “likely to succeed”. 9
[20] I note that in its submissions, Vision Asia has referred to the decision of Walker v Mittagong Sands Pty Limited 10in which Fair Work Australia (Commissioner Thatcher) stated that the test in s.611(2)(b) “does not of necessity require that the proceedings were hopeless or bound to fail”.11 That proposition seems to have been derived from the High Court decision in Spencer v Commonwealth of Australia.12However that case concerned s.31A of the Federal Court of Australia Act 1976, which empowers the Federal Court to give summary judgment for a party in a proceeding if the other party “has no reasonable prospect” of successfully defending or prosecuting the proceeding or part of it. Section 31A(3) provides that for the purposes of the section, a defence or a proceeding or part thereof need not be “(a) hopeless; or (b) bound to fail; for it to have no reasonable prospect of success”. That is why French CJ and Gummow J said13 “A proceeding need not be "hopeless" or "bound to fail" for it to have no reasonable prospect of success”, as the footnote to that sentence in the judgment makes clear. In the judgment of Hayne, Crennan, Kiefel and Bell JJ, it was observed that s.31A(3) “departs radically” from the understood basis of earlier provisions permitting summary judgment, which had required the “formation of a certain and concluded determination that a proceeding would necessarily fail”.14 There is no equivalent provision to s.31A(3) in the Act. In my view, the approach taken to the expression “no reasonable prospect of success” in Spencer necessarily takes into account the radical departure effected by s.31A(3), and should not therefore be taken to be readily applicable to s.611(2)(b) of the Act or as displacing the approach stated by the Full Bench in Baker.
[21] Whether it should have been reasonably apparent that an application had no reasonable prospect of success is to be assessed as at the time the application was made. 15
[22] There was never any issue that the ostensible reason for Mr Aggarwal’s dismissal was that his position had become redundant. Mr Aggarwal contested the genuineness of his redundancy on two alternate bases, identified in the Decision in the following way:
“[11]Mr Aggarwal’s case that his dismissal was not a genuine redundancy essentially consisted of two propositions. The first was that he performed a wide range of duties and functions which were at least significant if not essential to the successful operation of Vision Asia, and that these duties and functions were still required to be performed at the time of his dismissal. For that reason, he contended that for the purposes of s.389(1)(a) of the Act it could not be said that Vision Asia no longer required his job to be performed by anyone. Mr Aggarwal gave extensive evidence of the duties he had performed and their importance for the success of Vision Asia’s business operations in support of this proposition.
[12] The second proposition was that the redundancy was a sham, in that it was not genuinely motivated by the operational requirements of Vision Asia’s business, but rather by a commercial dispute which had arisen between Mr Rakesh Aggarwal and Mr Sudesh Iyer over control of World Media. This dispute, which appears to have had its origins in 2010, led to Mr Rakesh Aggarwal initiating legal proceedings against World Media, Multivest and Mr Iyer in the High Court of Singapore in November 2012. Those proceedings are continuing.
[13] Mr Aggarwal gave evidence that at a board meeting of SATV and Vision Asia held in Singapore on 14 November 2013, there was an attempt by Mr Iyer to have a dividend declared, which he opposed with the result that the dividend was rejected. Mr Aggarwal submitted that this, together with his involvement in his father’s litigation, was the real reason for his dismissal which occurred soon afterwards, and that “another board member (viz Sudesh Iyer) ... must have decided on the termination of my employment with Vision Asia and directed the interim CEO accordingly ...”.”
[23] Vision Asia has submitted that neither of Mr Aggarwal’s propositions had any reasonable prospect of success in that:
● The first proposition was contrary to well-established authority to the effect that the redistribution of duties of a particular job to other employees does not alter the fact that an employer no longer requires the role to be performed by anyone.
● The second proposition was not supported by any direct evidence or any evidence from which an appropriate inference could be drawn. It was clearly contradicted by the evidence of Mr Satigrama, Mr Aggarwal’s dismissal letter of 11 December 2013, his consultations with Mr Satigrama immediately before his dismissal, Vision Asia’s response to his unfair dismissal remedy application filed on 3 February 2014, and its submissions filed on 9 April 2014. This material would have made it apparent to a reasonable person that Mr Aggarwal’s dismissal was for purely operational reasons and was not influenced by any member of the Board or any other considerations.
[24] I accept Vision Asia’s submission that the first proposition had no reasonable prospect of success. The following conclusion was stated in the Decision concerning that proposition:
“[25] The first limb of Mr Aggarwal’s case, namely that his position had not genuinely become redundant because the duties he previously performed are still required to be performed, albeit by others, is misconceived. The fact that the duties of a particular job or position which has been abolished have been re-allocated to other positions as part of an employer’s restructure does not alter the fact that the employer no longer requires that position or job to be performed by anyone, as was explained by the Full Bench in Ulan Coal Mines Limited v Henry Jon Howarth and others 16 ...”
[25] I consider the position to be different with respect to the second proposition. As stated in paragraphs [26]-[27] of the Decision, Mr Aggarwal’s case that his redundancy was a sham was essentially inferential in nature. The facts upon which Mr Aggarwal relied upon in that connection were as follows:
● Mr Aggarwal’s father, Mr Rakesh Aggarwal, was one of the ultimate owners of Vision Asia together with Mr Sudesh Iyer and an investment company. 17
● In September 2008 Mr Aggarwal was placed on the boards of Vision Asia and its immediate parent company, South Asian Television Pty Limited (SATV), “effectively as a representative of his father’s interest in the ultimate ownership of those businesses”. He was then employed by Vision Asia as “Director - Business Development” commencing in March 2009. 18
● In or about 2010 a commercial dispute had arisen between Mr Rakesh Aggarwal and Mr Iyer over control of World Media, the principal parent company of Vision Asia. This led to Mr Rakesh Aggarwal initiating legal proceedings against World Media, Multivest (the ultimate holding company) and Mr Iyer in the High Court of Singapore in November 2012. Those proceedings are continuing. 19
● At a board meeting of Vision Asia and SATV on 14 November 2013, attended by Mr Aggarwal, Mr Iyer and Mr Satigrama, there was no suggestion of Mr Aggarwal being made redundant, and an increase to his remuneration package was approved. 20 However, during that meeting Mr Iyer proposed that a dividend be declared.21 This was opposed by Mr Aggarwal. As a result of his opposition, the dividend was not declared at that time (it was later declared after Mr Aggarwal’s dismissal).22
● Mr Aggarwal was informed that he was to be made redundant on 5 December 2013, three weeks after the board meeting. His dismissal took effect on 11 December 2013. The business remained in profit at the time he was dismissed, and nobody else from the business was made redundant at that time. 23
● On 16 December 2013 and with immediate effect, World Media as sole shareholder of SATV resolved to remove Mr Aggarwal as a director of SATV, and SATV as sole shareholder of Vision Asia resolved to remove Mr Aggarwal as a director of Vision Asia. 24
[26] Mr Aggarwal was able to call evidence to establish all of the above facts, and indeed they were not seriously in dispute (although of course Vision Asia sought to properly contextualise some of them). I consider that it was reasonably arguable that a rational inference could be drawn from the above facts that Mr Aggarwal’s dismissal was substantially motivated by the commercial dispute involving his father, and more immediately by his opposition to the declaration of a dividend at the 14 November 2013 board meeting. The dismissal, which came as a surprise to Mr Aggarwal, certainly “followed hard upon”. 25 The drawing of such an inference would have made available the conclusions that Mr Aggarwal’s dismissal was not a case of genuine redundancy and was unfair.
[27] That inference was not drawn by me in the Decision because it was contradicted by the direct evidence of Mr Satigrama, which I accepted. That evidence explained that Mr Satigrama had made the decision to make Mr Aggarwal redundant in late November 2013 by himself without any outside influence, and set out in impressive detail Vision Asia’s deteriorating commercial position and the detailed strategy developed by Mr Satigrama to reverse that position, much of which was yet to unfold. Mr Satigrama’s primary witness statement was filed and served on or about 9 April 2014, but in a redacted form which excluded much of the detail concerning Vision Asia’s commercial position and its restructuring strategy. Vision Asia’s outline of submissions concerning the genuine redundancy question, which was filed and served at the same time, was similarly redacted. A reply statement from Mr Satigrama was filed and served on or about 1 May 2014. The unredacted statement and submissions were not supplied until after the hearing commenced on 8 May 2014, and were supplemented by extensive oral evidence in chief adduced from Mr Satigrama during the hearing. I do not consider that Mr Aggarwal’s application could be characterised as being without a reasonable prospect of success by reference to evidence, ultimately accepted by the Commission, that was not provided to him until long after the application was filed. The same conclusion applies to the matters stated in Vision Asia’s response to the application, which was obviously filed some weeks after the application was filed and in any event did no more than state Vision Asia’s position.
[28] Of course, as Vision Asia points out, at the time that he filed his application Mr Aggarwal had received an explanation for the reasons for his dismissal in his discussions with Mr Satigrama on 5 and 11 November 2013, as well as in his termination letter of 11 December 2013. I accept that those discussions and that letter had certainly explained in some detail Vision Asia’s position that Mr Aggarwal’s position had become redundant for reasons of commercial necessity. However, I do not consider that it follows that because of the provision of this explanation, Mr Aggarwal’s application had no reasonable prospect of success. As earlier stated, there was never any issue that the ostensible reason for the dismissal was redundancy. That is what the discussions and the termination letter demonstrated. The question raised by Mr Aggarwal’s application was whether that ostensible reason was in fact the true reason. His case was that the explanations provided to him were, in effect, a sham and concealed the real reasons for his dismissal, which were not redundancy related. As I have earlier found, that case was reasonably arguable based on facts known to Mr Aggarwal at the time he filed his application and established at the hearing.
[29] I note for completeness, although it is not necessary for my conclusion, that Mr Aggarwal was represented by a firm of solicitors with experience in industrial law at the time he filed his application, and indeed the application appears to have been prepared by those solicitors. Those solicitors continued to represent him until 18 March 2014. Mr Aggarwal annexed to his submissions on the question of costs an emailed letter from those solicitors dated 4 March 2014. By doing so, he waived privilege over the letter. That letter contained a statement of the solicitors’ opinion that “your claim has merit”, but pointed to the difficulties likely to be encountered in finding evidence to prove the claim, the costs involved and the risks, unpredictability and inconvenience of litigation as reasons why a negotiated settlement was desirable. That opinion, while realistic, does not amount to a judgment that Mr Aggarwal’s application had no reasonable prospect of success. It certainly provides no basis to conclude that Mr Aggarwal was advised by his solicitors at the time his application was filed that it had no prospect of success, or that those solicitors would have participated in the filing of the application had that been the case.
[30] I am not satisfied that it should have been reasonably apparent to Mr Aggarwal that his application had no reasonable prospect of success. Consequently there is no power to order costs in favour of Vision Asia under s.611(2)(b).
Conclusion
[31] Vision Asia’s application for costs is dismissed.
VICE PRESIDENT
Final written submissions:
Harsha Aggarwal - 17 June 2014
Vision Asia Pty Ltd - 28 May and 27 June 2014
1 [2014] FWC 3125
2 Print S4692 (7 April 2000); followed by the Full Bench in T L Smith v Department of Foreign Affairs and Trade [2008] AIRCFB 495 at [11]-[13]
3 Page v Independent Pub Group t/a Liquor Lads [2013] FWC 9345 at [14]-[15]; Gibson v Darley Piper Australia [2011] FWA 6148 at [18]-[24]
4 See e.g. Kelly v Foley (1993) 51 IR 331 at 334; Van Huisstede v Commissioner of Police (No.2) (2001) 106 IR 56 at 64
5 PNs 7-12
6 PNs 19-20
7 Fair Work Act 2009 s.590; R v The Commonwealth Conciliation and Arbitration Commission and Others; Ex Parte The Melbourne and Metropolitan Tramways Board (1965) 113 CLR 228 at 243 per Barwick CJ and 252 per Menzies J; MM Cables (a division of Metal Manufactures Limited) v Zammit [1999] AIRC 553 at [19]-[24]; Health Services Union [2013] FWCFB 5551 at [72]
8 [2011] FWAFB 4014 at [10], followed in Qantas Airways Limited v Carter[2013] FWCFB 1811 at [19] and Brian Clothier v Ngaanyatjarra Media [2012] FWAFB 6323 at [15]
9 Keddie & Ors v Stacks/Goudkamp Pty Ltd [2012] NSWCA 254 at [58]
10 [2011] FWA 2225
11 Ibid at [44]
12 (2010) 241 CLR 118
13 Ibid at [17]
14 Ibid at [52]-[53]
15 Qantas Airways Limited v Carter[2013] FWCFB 1811 at [20]
16 [2010] FWAFB 3488
17 Decision at [5]
18 Decision at [6]
19 Decision at [12]
20 Decision at [14]
21 Decision at [28]
22 Decision at [13]
23 Decision at [8], [9], [14]
24 Decision at [10]
25 Hamlet Act I Scene 2
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