Kirby and Gamble
[2016] FCCA 1075
•6 May 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| KIRBY & GAMBLE | [2016] FCCA 1075 |
| Catchwords: FAMILY LAW – Property – weight to be given to wife’s initial contribution and husband’s superior income and contributions during the marriage. |
| Legislation: Family Law Act 1975 ss.75(2), 79 |
| Cases cited: Ferrero & Ferrero (1993) FLC 92-335 Hickey & Hickey & Attorney General for Commonwealth of Australia (2003) 30 Fam LR 355 Stanford & Stanford [2012] HCA 52 Pierce & Pierce (1999) 24 Fam LR 377 |
| Applicant: | MR KIRBY |
| Respondent: | MS GAMBLE |
| File Number: | SYC 1987 of 2014 |
| Judgment of: | Judge Henderson |
| Hearing date: | 10 June 2015 |
| Date of Last Submission: | 10 June 2015 |
| Delivered at: | Sydney |
| Delivered on: | 6 May 2016 |
REPRESENTATION
| Counsel for the Applicant: | Ms Murphy |
| Solicitors for the Applicant: | Integrity Legal Specialist |
| Counsel for the Respondent: | Mr Dura |
| Solicitors for the Respondent: | Constantine G Pavlis & Co |
ORDERS
That the wife pay within three calendar months of today’s date, the sum of $140,823 to the husband and simultaneously with that payment the husband transfer all his right title and interest in the former matrimonial home situate at Property G to the wife.
The husband be entitled to the monies in the parties joint names with (omitted) Bank account number (omitted).
Thereafter each party be entitled to all assets standing in their name or to which they have an interest or benefit to the exclusion of the other party.
In the event the wife is unable to comply with order 1 herein, each party shall do all things necessary to cause the Property G property to be listed for sale by auction to be conducted within 42 days of the making of these Orders or such other time as the selling agent recommends in order to sell the Property G property for the best price reasonably obtainable and upon sale the parties shall cause the proceeds of sale to be disbursed as follows:
(a)In payment of agents commission and advertising expenses and legal expenses of the sale;
(b)In payment of costs incurred in relation to the nomination of a real estate agent (if any), in payment of costs incurred in relation to the nomination of a solicitor (if any) and in payment of costs in relation to determination of value or selling price by the President of the NSW Division of the Australian Property Institute or his/her nominee (if any);
(c)Discharge of all mortgages and other liabilities secured on title.
(d)The net balance then to be divided as follows:
(i)In payment of 25% to the husband and the balance to the wife.
That, for the purposes of Order 4 above, the Real Estate Agent and auctioneer to act in respect of the sale shall be as agreed by the parties and failing agreement within seven (7) days of the date of these Orders, then shall be a Real Estate Agent and auctioneer appointed by the President of the Real Estate Institute of New South Wales or his/her nominee.
That, for the purposes of Order 1 above, the Solicitor to act in respect of the sale shall be as agreed by the parties and failing agreement within seven (7) days of the date of these Orders, then shall be a Solicitor appointed by the President of the Law Society of New South Wales or his/her nominee.
The wife maintain the mortgage on the former matrimonial home at its current level pending compliance with order 1 or 4.
IT IS NOTED that publication of this judgment under the pseudonym Kirby & Gamble is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYC 1987 of 2014
| MR KIRBY |
Applicant
And
| MS GAMBLE |
Respondent
REASONS FOR JUDGMENT
This is a property application heard on 10 June 2015 for one day.
Mr Dura of counsel represented the respondent wife and Ms Murphy of counsel represented the applicant husband. On my reading of the material it was apparent to me that there were very few factual disputes between these parties and the issue for determination was the weight I was to give to the wife’s initial contribution and to the husband’s contributions during the relationship to the current asset pool.
That appeared to be agreed by discussion with both counsel at the commencement of the trial, namely, that the real determination for me was the weight I attached to each party’s respective contributions prior to, during and post separation.
Ms Murphy, however, at times resiled from that position. However, after cross-examination of her client it was apparent that both the husband and wife agreed to the following:
a)that they applied all income, assets and property they owned – either prior to or acquired during the marriage to the marriage and its assets;
b)that they embarked upon joint endeavours as a couple, namely, the purchasing of properties and renovating of properties;
c)that they each cared for the other’s children – the wife’s three children and husband’s one child;
d)that they saw no difference in the support and care they each gave either party’s child or children;
e)that they had a cooperative approach to their life financially and otherwise;
f)that neither party asserted that the other had been wilful in spending money, or neglected their responsibilities to support each other and their children and each contributed to the very best of their ability during the marriage by way of direct financial contribution , indirect financial contribution and contribution as a parent and/or homemaker.
Thus, despite Ms Murphy at times complaining she did not know where money in the wife’s control had gone or that she did not understand why money had gone from one account in the wife’s name to another account in her name or the parties joint names this movement of money was not a concern for the husband under cross-examination.
As I said to Ms Murphy, on many occasions it mattered not to me if money had gone from one account to two accounts to three accounts to four accounts as the position of each party was they used all the income and resources they had to support their joint lifestyles.
How they supported their joint lifestyle in terms of where money was placed was not an issue for determination. The contribution to the support of their joint lifestyle and their percentage entitlement to the fruits of that joint endeavour was the issue for determination for me.
The applicant husband is currently living in (country omitted). He resigned his employment in October 2014 and went to live where his mother lives in (country omitted) and commence a new life.
The wife has remained in Australia. The wife is a self-employed (occupation omitted). Neither party claimed I should make any adjustment to their percentage based entitlement of their current assets for their past contribution by way of an adjustment under section 72(2) of the Act.
The material I read for the parties was as follows.
For the husband:
a)Initiating application filed 3 April 2014.
b)Affidavit and financial statement filed on 11 May 2015.
c)The affidavit consisted of an enormous bundle of exhibits, being every bank account he has ever had or had access to, group certificates, credit card statements supporting his financial contribution to the relationship.
d)Case outline prepared by his counsel, including the minute of order he sought.
For the wife:
a)Response filed 14 July 2014.
b)Affidavit and financial statement filed 19 May 2015.
c)Case outline filed by her counsel and the minute of order she sought.
The exhibits were as follows.
For the husband:
a)Husband’s Exhibit 1, the husband’s relevant tax returns during the relationship. It is conceded by the wife the husband always earned substantially more income than she.
b)Husband’s Exhibit 2, wife’s tax returns and notices of assessment from 2008 to 2013.
c)Husband’s Exhibit 3, a payslip of the husband when he was employed with the (employer omitted) dated 21 August 2014.
The wife’s exhibits.
a)Wife’s Exhibit 1, the husband’s (omitted) Super statement.
b)Wife’s Exhibit 2, index of all the parties bank account number prepared by the husband and used by him for identification purposes.
c)Wife’s Exhibit 3, husband’s (omitted) Bank statements from 11 December 2012.
d)Wife’s Exhibit 4, notice of tax assessment for the wife for 2014.
e)Wife’s Exhibit 5, receipts for Property M renovations.
f)Wife’s Exhibit 6, bank statements for the (omitted) Bank account ending (omitted).
The relevance of the husband’s payslip is that in submissions I asked whether I should do a two pool or one pool approach to superannuation. The husband has $129,000 in superannuation, the wife $34,000.
Mr Dura urged a one pool approach to all the assets. Ms Murphy was not quite as clear. One concern I had in which approach to take was whether the husband’s superannuation had been acquired by way of salary sacrifice and/or employer contribution or was only by employer contribution.
Husband’s Exhibit 3 indicates on its face that the only contribution to superannuation was the employer’s contribution. Mr Dura submitted to me that I could not, from one payslip, conclude that the entirety of husband’s superannuation had only been acquired by way of employer contribution and not salary sacrifice.
There was no evidence in any material as to this issue nor was leave sought to re-open to clarify.
Mr Dura pointed out that a financial statement filed by the husband earlier in the proceedings in 2014 had disclosed superannuation payments of $214 a week and that from this I could find that this was a contribution by him by way of salary sacrifice and that the current superannuation amount may be a combination of salary sacrifice as well as employer contributions.
I disagree with the reading of the husband’s prior financial statement. Going to the husband’s 2014 financial statement. I accept that the amount of $214 in Part G is headed personal expenditure. The husband’s disclosed gross income at that time was $2,352 per week.
Employer superannuation contributors are or were then 9% of a gross income. 9% of the husband’s gross income is about $214 a week.
This matter could have been put to bed had I heard evidence from the husband to explain however Ms Murphy did not seek to re-open.
Having regard to the mathematical findings that $214 was around 9% of the husband’s gross weekly income I find today that the husbands’ superannuation was accrued from employer only contributions and not by way of salary sacrifice.
Short Chronology
The husband is age 49, the wife 48.
The husband is unemployed at present.
The parties commenced cohabitation in (omitted) 2007 and were married on (omitted) 2008.
They separated under the one roof in March 2013.
They physically separated late August 2013.
There are no children of their relationship.
The wife had three children at the commencement of their relationship aged approximately 13, 11 and 9, and the husband had a son, X, who was nine at the commencement of cohabitation.
Throughout the relationship, the wife’s former husband and father of her children paid child support of $255 per week and the children spent time with their father alternate weekends and holidays and the like.
During the relationship, the husband in this case paid child support to his former wife for his son in the vicinity of $220 to $230 a week. X came to stay with them alternate weekends, school holidays and the like.
At the commencement of the cohabitation the parties lived at the wife’s property at Property M.
The husband received an inheritance from his grandparents in or about June 2007 of some $23,000.
In June 2008 the wife refinanced that property and borrowed a sum of $83,000. This sum, it is agreed, was used to pay her then tax debt of $19,000, her credit card debt of $6,500, and from her oral evidence further debts of about $3,500 and the husband’s then debt of $3,775 totalling $32,775.
That left some $50,000 or fewer dollars which after the payment of costs on the re-finance and other living expenses left the parties with some $46,000.
The wife’s case is that this money was used to pay the mortgage on Property M, until its sale, some $20,000 went towards the renovations and the remainder for general living expenses.
The husband agreed in oral evidence that he did not pay the mortgage on Property M.
The parties sold Property M in May 2009 for $510,000. They netted $230,000 and that money together with borrowings, was used to purchase the former matrimonial home at Property G for a sum of $700,000. The wife concedes that without the husband’s income this home could not have been purchased.
The parties purchased motor vehicles during the relationship and the husband continued to maintain payments on a Suzuki car in the wife’s name post separation.
The parties went to (country omitted) in 2012 and to (country omitted) and (country omitted).
The husband cashed in some bank shares he had at the commencement of the cohabitation of some $7,419.
The parties separated in March 2013 and continued to jointly pay the mortgage.
When the husband physically vacated the former matrimonial home he ceased paying the mortgage.
The husband withdrew a sum of $13,000 out of the mortgage being payments in advance and put that money in an account which was not an off-set account and this account is still in existence today.
The husband paid $2,000 for the arrears of mortgage post physical separation
The husband moved to (country omitted) in October 2014.
The assets and liabilities:
ASSET
VALUE
The property at Property G.
$1,050,000.
Household contents in the wife’s name.
$10,000.
The monies in a savings account withdrawn from the mortgage by the husband.
$13,032.
Husband’s household contents.
$2,000.
Husband’s 19 (omitted) shares.
$1,672.
Wife’s Honda Civic motor vehicle.
$10,000
TOTAL
$1,086,704.
LIABILITIES
VALUE
(omitted) Bank mortgage.
$460,000.
Wife’s tax debt.
$11,282.
TOTAL
$471,282.
NET ASSETS
$615,422.
SUPERANNUATION
VALUE
Husband’s superannuation
$129,059.
Wife’s superannuation.
$34,000.
TOTAL
$163,059.
NET ASSETS INCLUDING SUPERANNUATION
$778,481
I will not include the wife’s current savings in the pool for division.
I will not include the husband’s savings in the pool for division or any money he may have in his bank. Although there was some contention that some of his current savings were from his payout from the (employer omitted) on his cessation of employment there was no evidence adduced on this issue at the hearing.
The assets total $1,086,704.
The debts.
(omitted) Bank being the mortgage $460,000 agreed.
The wife seeks I take into account a tax debt of hers of $11,282 which she says was money earned by her and used for the benefit of the family for the year ended June 2014 being the last year of the parties’ cohabitation. The husband disputes this claim.
The net assets with only the mortgage taken into account are $626,704. With the wife’s tax debt of $11,282 they come to $615,422.
In relation to the wife’s tax debt, it is clear that the income for which she now has a tax debt of $11,000 was earned during the relationship and that the parties benefited from this income either by way of paying the mortgage, maintaining the home or the purchase of necessaries and I will allow the tax debt that the wife claims of $11,000 to be taken into account as a matrimonial debt.
Thus the net liquid assets for distribution are $615,422.
In relation to superannuation, the husband’s superannuation is $129,059.79 and will disregard the 79 cents in any calculation.
The wife’s superannuation is $34,000. The total superannuation is $163,000. The husband contends a 40 per cent entitlement to the liquid assets and that the parties’ superannuation remains where it is. The wife contends that she is entitled to a 75 per cent split of all assets.
The husband mounted a case via documents showing with mathematical precision the amounts of money he contributed to the relationship. The wife at no stage disputed this. The wife agrees he contributed his salary to this relationship and their assets. That work by him was entirely wasted as it appears never to have been a fact in issue.
The areas of contention are these.
a)What weight do I give the wife’s initial contribution in that she had equity in the property at Property M at the commencement of cohabitation which equity provided a deposit for the purchase of the former matrimonial home as well as a home for the husband?
b)What weight do I give the husband’s contribution of his inheritance and income towards renovations and maintaining and conserving the party’s property during the relationship?
c)Do I take a one pool or two pool approach to the total assets?
Neither party seeks an adjustment under section 75(2) of the Act.
It is agreed the value of the mortgage on the wife’s property at the commencement of the cohabitation was $175,000. It is not disputed that immediately upon cohabitation the husband commenced to contribute $300 towards his living expenses whilst in that property. This was less than the rent of about $350 he had been paying privately prior to moving in with the wife.
It is not in dispute that the parties purchased various motor vehicles during their relationship by way of lease and otherwise and that monies were borrowed to purchase a (omitted) motor vehicle.
It is not in dispute that the husband paid for the costs of these motor vehicles, he being on a much higher income than the wife.
It is not disputed each party contributed to the best of their ability their income, inheritances, energy and effort to their current assets and as a parent and homemaker.
In June 2008 when the parties refinanced Property M, the wife said $20,000 of the monies borrowed went towards the renovation of Property M and that the renovations totalled $36,000 to $38,000.
The husband’s case is only $30,000 was paid for the renovations and that he paid for the renovations from his bonuses, inheritances and wages.
It is agreed that the husband transferred $20,000 from his own account to the wife for the purposes of the renovations in 2008.
However, his own evidence is contradictory on his assertion of a contribution of his bonus to the renovation costs. The husband said in his affidavit, paragraph 35:
We used funds from my inheritance and my wage payments to pay for renovations which cost close to $30,000 in October 2008.
When one turns to the bank statements annexed to the husband’s affidavit in December 2007 the sum of $23,717 goes into the husband’s account with the (omitted) Bank. That is agreed as being his inheritance.
The balance of his account at that time was $786.97. The bonus he had been paid earlier from his employment had all but been spent as at December 2007 and thus could not have formed part of the renovation monies.
It is agreed the renovations took some 18 months to complete.
It is agreed that once the Property M property was re-financed neither party made mortgage payments and these payments were made from the excess borrowings.
The wife accepted that the husband contributed the $23,000-odd of his inheritance to the renovations in 2008 even though the records only show $20,000 being transferred.
Her case is then that she contributed her income to the renovations and that a sum of about $20,000 from the re-finance was used towards the renovations and that the renovations cost somewhere between $36,000 to $38,000.
I prefer the wife’s evidence as to the source of the renovation costs and that the renovations costs were between $36,000 to $38,000 for reasons that follow.
The renovations undertaken by the parties were that they replaced the flooring with timber, renovated two bathrooms, repainted the property and put in a new kitchen. Given the extent of the renovations it is more likely the costs were closer to $38,000 than $30,000 and I prefer the wife’s evidence on the renovation cost to the husband’s evidence.
As to the source of the renovation costs the wife spoke of cash payments to tradesmen. This evidence had the ring of truth and this was something the husband made no mention of.
The husband had no other evidence of paying towards the renovations such as transfers to the wife’s account or joint account, receipts for payment of tradesmen white goods etc.
The wife provided evidence of payment of renovation costs in Wife’s Exhibit 5 being cheque butt statements from her (omitted) Bank account with words such as “ Kitchen (omitted) $8,000”, “(omitted) tiles $66” , “Paint cash $500”, “Kitchen Appliances (omitted) $2,185”.
The husband did not have $30,000 in his account made up as he said of a combination of his inheritance and his bonus at any relevant time.
Even on the husband’s own evidence there was a difference of some $7,000 of the cash monies he said he had put into the renovation costs.
Under cross-examination the husband had to concede that the monies to pay for the renovation costs came from varied sources such as parties’ income, the increased borrowings and his inheritance. Wife’s Exhibit 5 clearly indicates she was paying for expenses relating to the renovations from her (omitted) Bank line of credit account as well as the mortgage payments and he conceded the mortgage was paid directly out of monies the parties borrowed by way of the refinance.
Thus the husband’s initial assertion that he did not know what happened to the 46-odd thousand dollars leftover from the refinance simply cannot be made out.
I am satisfied that the wife’s has made out her case in that the left over $46,000 odd thousand from the re-finance was spent on renovations, payment of the mortgage and general living expenses.
That together with his income and her income and the above monies, the renovations were completed and the parties lifestyle provided for.
This is the only conclusion to be drawn and is consistent with the wife’s assertion and the husband’s concession in cross-examination that the parties entered jointly into these endeavours and pooled their various resources to provide for themselves and their various children.
This is property application and requires four staged approach under s.79 of the Act from decisions such as Ferrero & Ferrero[1] and Hickey & Hickey & Attorney General for Commonwealth of Australia[2].
[1] (1993) FLC 92-335.
[2] (2003) 30 Fam LR 355.
The four stage approach is still good law even after Stanford & Stanford[3].
[3] [2012] HCA 52.
The first stage is to identify the matrimonial property, its value and nature.
The second stage is to assess the value of the parties’ contributions expressed as a percentage of the value of their assets to the acquisition, maintenance, conversation and renovation of their matrimonial property, having regard to the factors under s.79(1)(a), (b) and (c).
a)Section 79(1)(a) is an assessment of the parties direct financial contribution;
b)Section 79(1)(b) is an assessment of the indirect contribution; and
c)Section 79(1)(c) is an assessment of the value of each parties' contribution as a parent and homemaker during the marriage.
The third stage under s.79(4)(e) is to determine whether, having regard to the factors under s.75(2), I ought vary the assessed percentage entitlement of either party to take into account their future needs.
The fourth stage is to look back at the consequences of the proposed orders to determine if they are just and equitable in all the circumstances.
When the Property M property was sold in 2009 they had been living in the home for some two years.
It is clear that the husband made a direct contribution to the net proceeds of sale of Property M by his inheritance of $23,000, his income and energy and effort.
It is clear the wife made the overwhelming contribution to the net sale proceeds in that she had owned the property well before the relationship subject to a mortgage, that this home provided a matrimonial home for the parties, her income and her energy and effort.
Having regard to the initial contribution, being the wife’s ownership of this property, albeit with a mortgage and that consistent with the principles in Pierce & Pierce[4] on the treatment of an initial superior contribution by one party to the current assets being in part the value of the initial contribution and the use made of that contribution, I find as follows.
[4] 24 Fam LR 377.
The use of that initial contribution was providing a matrimonial home for the parties and a platform from which they could then purchase a larger and more comfortable home for a family of four children and two adults. Even though the wife conceded that without the husband’s superior income they would not have been able to purchase Property G, I assess the wife’s contribution based entitlement to be 80 per cent and the husband’s 20 per cent.
In relation to the party’s contributions once the property at Property G was purchased, I find their contributions to be equal up until physical separation.
Up until physical separation, these parties paid for, to the best of their ability, the mortgage, various loans in respect of motor vehicles and other assets purchased payment for the care of their children and lifestyle choices such as holidays and the choices they made in the expenditure of their money. Having heard both parties give evidence and be examined and cross-examined I could discern nothing other than that the parties themselves agreed with this proposition.
In relation to contributions as parent and homemaker, I find that the husband would have made a contribution to the wife’s three children over and above the contribution the wife made to his one child and I will allow him a an additional 5 per cent contribution for his parent and homemaker contribution. This is despite my accepting that the wife would have carried out the bulk of the shopping, ironing, cooking and cleaning for the family.
Post-separation, I accept that the husband paid arrears of mortgage of $2,000 for a property he was not living in and continued to pay the lease on the wife’s motor vehicle. Even though his conduct in drawing down $13,000 of the mortgage, placing it into a saving account, not even an off-set account did make the wife’s payment of the mortgage somewhat more arduous the wife remained in the home to his exclusion and I will give the husband a 5 per cent contribution post-separation for the costs he paid for the wife while she was living in the former matrimonial home.
This would then give the parties an entitlement based upon their past contributions of 70% to the wife and 30% to the husband. There is no adjustment sought by either party under section 75(2) of the Act.
The next issue for my determination I do I take a one pool or two pool approach. The husbands’ superannuation entitlement is $129,059 and the wife’s $34,000. The total superannuation is $163,000.
The husband has 4 times the value of the wife’s superannuation.
Mr Dura urged a one pool approach. Ms Murphy was not as clear however her orders bespeak a two pool approach.
I favour a two pool approach for the following.
It is some twenty years or more perhaps until either party can access their superannuation.
I have found that the contributions into the husband’s superannuation were by his employer, not from salary sacrifice. No monies as such from the family went into that fund.
The husband sets out in his affidavit what he says his superannuation was at the date of cohabitation which was $45,000. It grew to $107,000 up to the date of separation under the one roof on 25 March 2013. It has now grown an additional $22,000 since that date. It is clear the bulk of the superannuation accrued during the parties’ relationship and the parties working together, supporting each other mutually. Thus there is a contribution by each to the other’s superannuation although the wife’s at $36,000 is modest.
Given that the husband has 4 times the wife superannuation entitlement and that the bulk of the current value of his superannuation accrued during the relationship, I will allow the wife a further 5% on her contribution based entitlement to take account of the fact of her contribution to the husband’s superannuation during the relationship.
This then results in the wife receiving 75 per cent of the net matrimonial assets and the husband, 25 per cent of the net matrimonial assets.
The last stage is to determine whether the results of the orders I propose to make are just and equitable
The net proceeds for distribution are liquid assets goods and chattels $615,422 of which the home net equity in the home is worth $590,000. Superannuation $129,059 to the husband and $34,000 to the wife.
25% of the net liquid assets to the husband is $153,855. The husband is currently seized of assets being his household contents of $2,000, shares of $1,672 and $13,032 being monies I will allow him which he drew out of the mortgage in August 2013 and placed into a bank account. This totals $16,704. This figure less his entitlement of $153,855 is a payment to him by the wife of $137,151 rounded up.
The wife seeks to retain the former matrimonial home. I will give her the opportunity to do so by her paying the husband $137,151. If she is unable to do so within 3 calendar months of these orders the home will be sold and the husband will receive 22% of the proceeds of sale.
The percentage of 22% is calculated as follows. The wife is to pay the husband $137,151 to retain the home. $137,151 is 22% of $590,000. This method ensures that the husband receives his percentage entitlement whether the home sells for more or less than the agreed value.
I will order the wife maintain the current mortgage on the former matrimonial home pending compliance with these orders.
This results in the husband having assets of $153,855 and superannuation of $129,059 a total of $282,194. The wife having assets worth $461,567 and superannuation of $34,000 a total of $495,567.
I find these orders are just and equitable in all the circumstances.
I certify that the preceding one hundred and twenty-two (122) paragraphs are a true copy of the reasons for judgment of Judge Henderson
Date: 6 May 2016
Key Legal Topics
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Family Law
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Property Law
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Remedies
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Costs
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Injunction
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Procedural Fairness
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