Re Hay (No. 5)
[2000] NSWDDT 7
•19 May 2000
(2000) 19 NSWCCR 735
ROLLS ROYCE INDUSTRIAL POWER (PACIFIC) LTD
v
JAMES HARDIE & CO PTY LTD; Re HAY (No. 5)
[2000] NSWDDT 7
and
JAMES HARDIE & CO PTY LTD
v
ROLLS ROYCE INDUSTRIAL POWER (PACIFIC) LTD;
Re HAY (No. 5)
Dust Diseases Tribunal of New South Wales: Curtis J
19 May 2000
Dust Diseases Tribunal - Joint and concurrent tortfeasors - Contribution - Costs - Power to order contribution by one tortfeasor to costs of another tortfeasor payable by a contributing tortfeasor - Liabilities not co-ordinate - No power to make order - Law Reform (Miscellaneous Provisions) Act 1946 (NSW) s 5
Dust Diseases Tribunal - Joint and concurrent tortfeasors - Costs - Contribution - Power to order contribution by one tortfeasor to costs of another tortfeasor payable by a contributing tortfeasor - Liabilities not co-ordinate - No power to make order - Law Reform (Miscellaneous Provisions) Act 1946 (NSW) s 5
Dust Diseases Tribunal - Reconsideration of judgment - Recision and amended judgment - Misapprehension of Tribunal as to facts or law - Recision power discretionary - Only exercised if Tribunal convinced relevant decision manifestly wrong - Dust Diseases Tribunal Act 1989 (NSW), s 13(6)
Dust Diseases Tribunal - Costs - Offer of settlement in Calderbank letter - Offer rejected - Prima facie effect when recipient of letter does not obtain a more favourable result - Exceptions to rule
Dust Diseases Tribunal - Costs - General rule - Costs follow the event unless particular issue clearly separable
P.M. Hall QC, D.G. Stewart and R.A. Dalgleish, for Rolls Royce
F.M. Douglas QC and G.M. Watson, for James Hardie
Ex tempore
CURTIS J: On 15 October 1999 I found that James Hardie & Co Pty Ltd (James Hardie) was liable pursuant to s 5 of the Law Reform (Miscellaneous Provisions) Act 1946 to pay to Rolls Royce Industrial Power (Pacific) Ltd (Rolls Royce) $92,500 being 50 per cent of that sum for which the defendant Rolls Royce was liable to the plaintiff.
I also found that, because James Hardie was already liable (by judgment pursuant to that same legislation) to contribute 70 per cent of the sum for which the co-defendant Pacific Power was liable to the plaintiff, Rolls Royce should pay to James Hardie $54,750 being 50 per cent of that sum for which James Hardie was liable to Pacific Power.
Regrettably, without hearing further from the parties as to what should properly follow from these findings I made the following orders: see Rolls Royce v James Hardie (No. 4) at [254].
1.Judgment for Rolls Royce Industrial Power (Pacific) Ltd against James Hardie & Co Pty Ltd in the sum of $37,750 [$92,500 - $54,750].
2.Rolls Royce Industrial Power (Pacific) Ltd is to pay to James Hardie & Co Pty Ltd one half of the liability of James Hardie & Co Pty Ltd to Pacific Power in respect of Pacific Power’s costs.
By amended motion of 10 December 1999 Rolls Royce seeks orders:
3A.That Order No. 2 of the judgment of 15 October 1999 be rescinded and in lieu thereof an order be made dismissing the claim by the cross-claimant James Hardie in its cross-claim against the cross-defendant Rolls Royce that Rolls Royce pay any proportion of Pacific Power’s costs of Pacific Power’s cross-claim against James Hardie.
[At [5] to [14] his Honour made various observations not calling for report and continued:]
Rolls Royce submits that, as a matter of law it cannot be liable to contribute to the liability of James Hardie to pay the costs incurred by Pacific Power in pressing its claim for contribution against James Hardie. Accordingly Order No. 2 of 15 October 1999 should be rescinded and in lieu an order be made dismissing that much of James Hardie’s claim.
Having now heard argument and further considered the matter in the light of the reasoning of the Court of Appeal in James Hardie & Co Pty Ltd v Wyong Shire Council (2000) 19 NSWCCR 679 (Drake’s case), I believe this complaint to be well founded.
Any entitlement of James Hardie to an order that it receive contribution to its liability for the costs of Pacific Power must be found in the terms of the statute. It cannot be found in the costs rules: Mahlo v Westpac Banking Corporation Ltd [1999] NSWCA 358.
Section 5 of the Law Reform (Miscellaneous Provisions) Act 1946 (the 1946 Act) relevantly provides:
(1) Where damage is suffered by any person as a result of a tort (whether a crime or not)—
…
(b)if more than one action is brought in respect of that damage … the sums recoverable under the judgements given in those actions by way of damages shall not in the aggregate exceed the amount of the damages awarded by the judgements first given; and in any of those actions, other than that in which judgement is first given, the plaintiff shall not be entitled to costs unless the court is of opinion that there was reasonable ground for bringing action;
(c)any tort-feasor liable in respect of that damage may recover contribution from any tort-feasor who is, or would if sued have been, liable in respect of the same damage, whether as a joint tort-feasor or otherwise, so, however, that no person shall be entitled to recover contribution under this section from any person entitled to be indemnified by that person in respect of the liability in respect of which the contribution is sought.
(2) In any proceedings for contribution under this section the amount of the contribution recoverable from any person shall be such as may be found by the court to be just and equitable having regard to the extent of that person’s responsibility for the damage; and the court shall have power to exempt any person from liability to make contribution, or to direct that the contribution to be recovered from any person shall amount to a complete indemnity.
(Emphasis added.)
The short question to be answered is whether the liability of James Hardie to pay the costs of Pacific Power is a liability “…in respect of the same damage” for which Pacific Power was liable by judgment in favour of the plaintiff and for which James Hardie is now liable by judgment in favour of Pacific Power.
On 16 August I gave reasons why the liability of James Hardie to Pacific Power was a liability “in respect of” the plaintiff’s damage triggering an entitlement in James Hardie to seek contribution from Rolls Royce pursuant to the statute [see Rolls Royce Industrial Power (Pacific) Ltd v James Hardie & Co Pty Ltd (No. 2) (1999) 18 NSWCCR 389 at [20]]. I did not then turn my mind to the question of whether “damage” in this context included Pacific Power’s costs.
Giles JA in James Hardie v Wyong Shire Council (supra) with whom Heydon JA agreed, demonstrated by textual analysis how it was that a liability “in respect of” the plaintiff’s damage included a liability both for damages and the plaintiff’s costs. He did this by reference to the specific provisions relating to the plaintiff’s costs in s 5(1)(b) of the 1946 Act and a passage in Trustees Executives & Agency Co Ltd v Reilly [1941] VLR 110 at 111, where Mann CJ said that the phrase “ ‘in respect of ’ has the widest possible meaning of any expression intended to convey some connection or relation between the two subject matters to which the words refer”.
I had relied upon the same passage in my ruling of 16 August 1999. The words of Mann CJ should, however, now to be read in the light of the statement by the High Court in Workers’ Compensation Board (Qld) v Technical Products Pty Ltd (1988) 165 CLR 642 at 653 - 4, where Deane, Dawson and Toohey JJ said:
Undoubtedly the words “in respect of” have a wide meaning, although it is going too far to say as did Mann CJ in Trustees Executives and Agency Co Ltd v Reilly that “they have the widest possible meaning of any expression intended to convey some connection or relation between the two subject matters to which the words refer”. The phrase gathers meaning from the context in which it appears and it is the context which will determine the matters to which it extends.
See also Commissioner of Taxation (Cth) v Scully [2000] HCA 6, 169 ALR 459 at 471 - 472 per Gaudron, McHugh, Gummow, Callinan JJ.
Beyond his textual analysis Giles JA in James Hardie v Wyong Shire Council went on to consider the context in which the words of s 5 were to operate, which context supported a construction of the word “damage” in s 5(1)(c) including the plaintiff’s costs. He said:
the tortfeasor found liable and the contributing tortfeasor are under co-ordinate liabilities to make good the one loss as to damages. The 1946 Act reinstated the principle of natural justice by abolishing the rule in Merryweather v Nixan, and went further by specifically providing for unequal contribution between the tortfeasors. The tortfeasor found liable and the contributing tortfeasor are in one sense not under co-ordinate liabilities to make good the one loss as to costs, because the order in favour of the plaintiff is only made against the tortfeasor found liable. But if there is to be complete recognition of the principle of natural justice, and equality of benefit and burden, costs should be treated in the same way as damages. The plaintiff could have sued either the tortfeasor found liable or the contributing tortfeasor, or both. Recovery from the tortfeasor found liable will discharge the contributing tortfeasor. If the plaintiff had sued the contributing tortfeasor instead of, or as well as, the tortfeasor found liable, the contributing tortfeasor would have been ordered to pay the costs. So it is just and equitable that the burden of the plaintiff’s costs should be shared between the tortfeasors, so that the burden will not fall on one of them to the exclusion of the other because the plaintiff chose to sue only the one. (Emphasis added.)
The purpose of s 5 is to give legal force to what would otherwise be a moral obligation founded in natural justice upon a contributing tortfeasor to pay a proportion of both the plaintiff’s damages and his costs for which the claimant tort feasor has become liable. This liability, though not co-ordinate after judgment against one tortfeasor, was so before that moment.
While in the widest sense the claimant costs of Pacific Power were incurred “in respect of” the plaintiff’s damage, the context in which they are in turn claimed as a liability from which James Hardie seeks relief is quite different from that which led Giles JA to include the plaintiff’s costs in the contribution which James Hardie was entitled to receive in James Hardie v Wyong Shire Council. In the present case the liability of James Hardie in respect of Pacific Power’s costs is not now, nor was ever, co-ordinate with any liability of Rolls Royce to pay those costs. It is a liability of James Hardie to which Rolls Royce is a stranger and “The essence of the right to contribute lies in the liability to a common demand” (Halsbury 4th ed, vol 9, par 654, see also par 655). I conclude that Rolls Royce cannot be liable pursuant to s 5 of the 1946 Act to contribute to the costs incurred by Pacific Power in pressing its claim against James Hardie.
Power to Rescind
Section 13(6) of the Dust Diseases Tribunal Act provides:
Whenever appropriate, the Tribunal may reconsider any matter that it has previously dealt with or rescind or amend any decision that the Tribunal has previously made.
I accept the submission of James Hardie that this power should be exercised only in very exceptional cases.
In CSR Ltd v Bouwhuis (1991) 7 NSWCCR 223 Priestley JA (with whom Samuels JA relevantly agreed) said at 247:
The power would in my opinion only be one the Tribunal should even consider exercising in the kind of circumstances referred to by Lord Wilberforce in Mulholland, that is, stated shortly, where something basic to the decision has been clearly falsified by subsequent events.
In the present case basic to my decision to award James Hardie contribution to the costs of Pacific Power was my impression that such an order was not in dispute and would follow if the primary question of contribution was determined adversely to Rolls Royce.
In the course of the trial I drew the attention of the parties to the decision of the Court of Appeal in Robinson v Brennan& Powell Pty Ltd [1999] NSWCA 85 (upon which I no longer rely) and relevantly said to junior counsel for Rolls Royce:
Mr Dalgleish, are you going to contend that His Honour Judge Armitage was correct in Drake, that is Hardy in relation to the Pacific Power money which they want to bring into the kitty, want their costs included. Judge Armitage said they could not, but it seems to me to be manifestly wrong … unless you trouble me with further submissions, I will not look at that Mr Dalgleish.
At the time I had noted the result in Robinson but not digested the reasons. It is not, as I then thought, authority for the contention that James Hardie were in this case entitled to contribution to the costs of Pacific Power.
On the 15 October 1999 when handing down reasons for judgment (which I had written) I said:
I propose to make an order apportioning the sum for which James Hardie is liable in respect of the costs of Pacific Power. The reasons for that apportionment do not appear in the published reasons. Although inconsistent with the judgement of Armitage J in this Tribunal, such a course is compatible with the recent judgement of the Court of Appeal, which I have mislaid and the name of which escapes me, but to which I have referred the parties.
I understood from comments made by Mr Dalgleish for Rolls Royce that it was common ground that these costs were to be included, but I cannot find the transcript reference to confirm this impression. In any event, to hold otherwise would be capricious, when Rolls Royce’s liability to the plaintiff, what is also apportioned, includes the plaintiff’s costs. The result should not depend on whether a judgement liability is inclusive of costs, or plus costs.
In fact Mr Dalgleish had made no comment from which it may be inferred that the inclusion of the costs was common ground. I did him and his client an injustice. It is true that Rolls Royce were on notice of the claim by James Hardie for contribution to the costs of Pacific Power. It is also true that the entitlement to this contribution was dealt with at some length in the written submissions of James Hardie. It is because of oversight on the part of counsel for Rolls Royce that the matter was not addressed and oversight on my part that I did not ask counsel whether the point was conceded. In any event I did not turn my mind to the merits and failed to give adequate reasons for making the order.
My belief that the matter was not in issue was false. A party who is to suffer an adverse order may be entitled only to the briefest of reasons, but he is certainly entitled to a conscientious adversion by the trial judge to the legal issues involved. That this has not occurred in the present case is in no small measure because of the neglect of counsel for Rolls Royce. This is perhaps understandable in view of the complexity and length of the trial. However, it is also because of failures on the part of the Tribunal.
An alternative source of power to grant the relief sought by Rolls Royce may be found in the inherent power of a court to withdraw, alter or modify an order after it is delivered but before it is perfected by entry of judgment (in this case Pt 41, r 11 and r 13 of the Supreme Court Rules 1970, applicable by virtue of r 2 of the Dust Diseases Tribunal Rules, govern entry of judgment). The English authorities in this regard are collected by Neuberger J in Charlesworth v Relay Roads Ltd [2000] 1 WLR 230 at 233 - 235. (See also “Jurisdiction to recall judgment” CJQ vol 19, Jan 2000 at 6.) His Honour there permitted pleadings to be amended and fresh evidence to be led after he had given judgment. In so doing he cited with approval the observations of Millett LJ in Gale v Superdrug Stores Plc [1996] 1 WLR 1089 at 1098:
The administration of justice is a human activity, and accordingly cannot be made immune from error. When a litigant or his adviser makes a mistake, justice requires that he be allowed to put it right even if this causes delay and expense, provided that it can be done without injustice to the other party (at 235).
In another context in Cropper v Smith (1884) 26 Ch D 700, Bowen LJ said:
Now, I think it is a well established principle that the object of Courts is to decide the rights of the parties, and not to punish them for the mistakes they make in the conduct of their cases by deciding otherwise than in accordance with their rights. Speaking for myself, and in conformity with what I have heard laid down by the other division of the Court of Appeal, and by myself as a member of it, I know of no kind of error or mistake which, if not fraudulent or intended to overreach, the Court ought not to correct, if it can be done without injustice to the other party.
This passage was cited with approval in the High Court by Barton J in Shannon v Lee Chun (1912) 15 CLR 257 at 261 and again more recently by Kirby J in Queensland v JL Holdings Pty Ltd (1997) 141 ALR 353 at 365.
The jurisdiction to reconsider a judgment was addressed by the High Court in Autodesk Inc v Dyason (No. 2) (1993) 176 CLR 300. Although dissenting on the facts Mason CJ said at 302:
The public interest in the finality of litigation will not preclude the exceptional step of reviewing or rehearing an issue when a court has good reason to consider that, in its earlier judgment, it has proceeded on a misapprehension as to the facts or the law.
I accept that circumstances sufficient to enliven the jurisdiction to reopen a judgment must be rare and exceptional. In the present case because an important issue has not been determined in accordance with the law due to a misapprehension on my part, I believe I have jurisdiction.
Discretion
James Hardie submits that the power of rescission ought not be exercised unless the Tribunal is convinced that the decision in question was manifestly wrong. I agree. However, having now heard argument, with the benefit of the decision in James Hardie v Wyong Shire Council, I am so convinced.
It is true that the question is not without difficulty and it may be that, as James Hardie so delicately submit, it would be “more appropriately dealt with by the Court of Appeal than by the Tribunal”; a notice of appeal has been filed in relation to other issues determined in my judgment. It is also true that I have now been apprised of “without prejudice” communications relating to costs and for that reason James Hardie submit that I should decline to rescind my order.
The substance of “without prejudice” settlement offers should not be disclosed to the court until after all questions of liability and the relief to be granted have been determined. See Pt 22, r 7 of the Supreme Court Rules. The policy reasons behind this rule are self-evident. Nevertheless, the Tribunal has a discretion whether or not to hear and determine the issues after such disclosure according to the circumstances of the case: see Millensted v Grosvenor House (Park Lane) Ltd [1937] 1 KB 717; Murphy v Murphy [1963] VR 610.
In the present case the parties are two large wealthy corporations and, unlike cases involving natural persons, no feelings of natural sympathy arise toward one or the other concerning the result. If I can get the law right, I am indifferent to the effects upon their pockets. I feel myself similarly unconstrained by the differing views on the merits taken by their legal advisers reflected in the offers of compromise.
Most relevant to the exercise of discretion is the fact that I am required to exercise a further discretion in the determination of costs. It is appropriate that I do this upon those orders which I presently believe will stand in the Court of Appeal.
Orders
I make the following orders:
1.Rescind order for judgment in favour of Rolls Royce in the sum of $37,750.
2.Enter verdict for Rolls Royce in the sum of $144,708 in the cross-claim by Rolls Royce against James Hardie.
3.Enter verdict for James Hardie in the sum of $54,750 in the cross-claim by James Hardie against Rolls Royce. (Interest is de minimus.)
4.Judgment for Rolls Royce in the sum of $89,950.
5.Rescind order that Rolls Royce pay to James Hardie one half of the liability of James Hardie to Pacific Power in respect of Pacific Power’s costs.
Costs
The following matters are here relevant:
1.On 4 June 1999 James Hardie offered by Calderbank letter to pay to Rolls Royce $129,500 being 70 per cent of that amount paid by Rolls Royce to the plaintiff and to pay in addition Rolls Royce’s costs of its cross-claim against James Hardie. This offer was open to be accepted within 14 days from the date of the letter.
2.On 24 June 1999 James Hardie submitted to judgment in favour of Pacific Power on its cross-claim in the sum of $129,500.
3.On 25 June 1999 Rolls Royce offered by Calderbank letter to accept $157,250 being an 85 per cent contribution plus interest in the amount of $84,169 and costs.
4.On 22 July 1999 James Hardie by letter advised Rolls Royce of the proposed cross-claim for contribution to the Pacific Power judgement.
5.On 2 August 1999 the trial commenced.
6.On 5 August 1999 James Hardie filed a cross-claim against Rolls Royce seeking contribution to the liability of James Hardie to Pacific Power. On 16 August 1999 James Hardie was given leave to bring this cross-claim.
7.Rolls Royce failed in a claim based in contract. This claim accounted for a substantial amount of the hearing time.
The Calderbank letter of Rolls Royce has obviously failed.
I believe the Calderbank letter of James Hardie must also fail. Had the matter proceeded in the absence of the later claim for contribution by James Hardie towards its liability to Pacific Power, the offer of $129,500 would not have been more favourable than the result achieved by Rolls Royce. The author of the letter had overlooked the interest to which Rolls Royce may be entitled.
The relevant legal principles concerning Calderbank offers are to be found in Maitland Hospital v Fisher(No. 2) (1992) 27 NSWLR 721, Tickell v Trifleska Pty Ltd (1990) 25 NSWLR 353, and Multicon Engineering Pty Ltd v Federal Airports Corporation (1996) 138 ALR 425. They were discussed by me in Roberts v James Hardie & Co Pty Ltd, NSWDDT, No. 15/97, 22 August 1997, unreported, and Gibson v SIFC, NSWDDT, No. 89/96, 9 September 1988, unreported. No useful purpose is served by repeating that material here.
The facts of this case involve a tension between two principles. On the one hand an order for costs should prima facie follow in the event of an offer not being accepted and the recipient of that offer not getting a more favourable result: Multicon Engineering Pty Ltd v Federal Airports Corporation (supra); NSW Insurance Ministerial Corporation v Reeve (1993) 42 NSWLR 100; Messiter v Hutchinson (1987) 10 NSWLR 525. Because “litigation is inescapably chancy” (Maitland Hospital at 725) this prima facie rule applies notwithstanding those changes of fortune which often occur at trial due to the fluid nature of adversarial litigation.
On the other hand some changes of circumstance may be relevant to the exercise of a discretion so as to deny effect to an offer of settlement: Gaskin v British Aluminium Co Ltd [1976] 1 QB 524 (CA); Proetta v Times Newspapers Ltd (1991) 4 All ER 46; Hillier v Sheather (1995) 36 NSWLR 414 at 420 - 421; Fowdh v Fowdh, NSWCA, No. 40399/93, 4 November 1993, unreported.
In Fowdh v Fowdh, Mahoney A-P said at 10:
It is one thing for a plaintiff to present her evidence, make an offer of compromise, and to succeed at the trial on that evidence. In such a case, indemnity costs may be warranted. It is another thing for the plaintiff to present a case and make an offer of settlement, and then to succeed at the trial upon a relevantly different case. A plaintiff who has done that may not readily receive indemnity costs. I do not mean by this that minor differences between the case at offer and the case at trial will be of significance or that, if the difference be significant, a discretionary judgment for indemnity costs may not be given. But where the difference between the position at offer and the position at trial be as the Master assessed it to be, a decision to refuse indemnity costs may be readily understood…The Master rightly saw the case evidenced by the plaintiff at offer as relevantly different from that on which she succeeded. To order indemnity costs because the defendant did not accept an offer made on such a basis does not, in my opinion, further the purpose of Pt 52, r 17.
In the present case James Hardie has succeeded at trial upon a relevantly different case than that which fell for consideration by Rolls Royce at the time of the Calderbank letter.
Rolls Royce did not receive notice of the cross-claim by James Hardie in respect of the Pacific Power judgment until after the time for acceptance of the offer had expired. The purpose of the rules underlying Calderbank offers, the saving of public and private legal costs by threatening the pocket of that party whose unreasonable attitude is notionally the real cause and occasion of continued litigation, is not served unless that party has an informed opportunity to assess his chances. Rolls Royce did not have such an opportunity before the time for acceptance of James Hardie’s offer had expired and I believe the prima facie rule to be displaced. Rolls Royce has in one sense achieved a result more favourable than the Calderbank offer. The sum of the contribution ($92,500) and interest ($52,208) to which it is entitled ($144,500) exceeds by $15,208 the Calderbank offer ($129,000).
In another sense Rolls Royce, having secured a 50 per cent contribution, has achieved a result less favourable than the 70 per cent offered in the Calderbank letter. There are many cross-claims on foot between the parties. Had the offer made provisions for interest I would be minded to give effect to the offer notwithstanding the later change of circumstance. Such an offer to my mind would have been so reasonable as to demand acceptance. Upon refusal, the real cause of the subsequent litigation, including the fresh claim by James Hardie for contribution to the Pacific Power judgment, would then have been intransigence on the part of Rolls Royce.
The costs then fall to be determined pursuant to the costs power contained in s 29 of the Dust Diseases Tribunal Act and Pt 52A of the Supreme Court Rules.
Part 52A, r 11 is in the following terms:
If the Court makes any order as to costs the Court shall, subject to this Part, order that costs follow the event, except where it appears to the Court that some other order shall be made as to the whole or any part of the costs.
It is apparent from the discussion in Ritchie’s Supreme Court Practice that costs may not follow the event if a particular issue is clearly separable.
In Permanent Trustee Australia Ltd v FAI General Insurance Co Ltd, NSWSC, (BC 9802305), 3 June 1998, unreported, Hodgson CJ in Eq said at 6:
I accept that if an issue is raised reasonably and is not disproportionate to the whole case, then normally the successful party [i.e. Overall] should get his or her costs. However, particularly in relation to severable issues, the lesser strength of the point raised and the greater proportion it bears to the whole case, the more likely it is that the successful party may be deprived of costs; and if the Court comes to the view that it was unreasonable to raise the issue, then the successful party may have to pay costs of that issue.
In the present case the claim by Rolls Royce in contract upon which it failed is clearly separable and Rolls Royce should be deprived of its costs on this issue. However, this claim was not brought unreasonably in the sense that no reasonably prudent legal adviser would have advised that it be pursued and accordingly Rolls Royce should not have to pay the costs of James Hardie thrown away on the point.
Rolls Royce is overall the successful party. James Hardie is to pay the costs of Rolls Royce excluding those costs incurred in relation to the contractual claim. Liberty to apply to the Tribunal to determine the overall proportion of costs to be disallowed if the parties cannot agree on a simple formula for the purpose of that assessment.
I will now hear the parties on the costs of this motion.
Orders accordingly
Solicitors for Rolls Royce: Hunt & Hunt
Solicitors for James Hardie: Allen Allen & Hemsley
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