STOLT-NIELSEN Australia Pty Ltd v AUSSTAR COMMODITY and Marketing Pty Ltd
[2013] FCCA 602
•31 May 2013
FEDERAL CIRCUIT COURT OF AUSTRALIA
| STOLT-NIELSEN AUSTRALIA PTY LTD & ANOR v AUSSTAR COMMODITY & MARKETING PTY LTD | [2013] FCCA 602 |
| Catchwords: ADMIRALTY – Claims for demurrage and freight charges – application for summary judgment on the basis of there being no reasonable prospect of successfully defending the claim by the Respondent – whether Bills of Lading constituted contracts of carriage – whether right to demurrage provided in contract of carriage – Respondent argued there are issues to be tried – finding in favour of Applicants – judgment entered for the Applicants. |
| Legislation: Federal Court of Australia Act 1976 (Cth), s.31A |
| BHP Trading Asia v Oceaname Shipping Ltd [1996] 67 FCR 211 Cosmos E-C Commerce Pty Ltd v Sue Bidwell & Associates Pty Ltd [2005] NSWCA 81 Fortron Automotive Treatments Pty Ltd v Jones (No 2) [2006] FCA 1401 General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 Granitgard Pty Ltd v Termicide Pest Control Pty Ltd [2008] FCA 55 Hi-Fert Pty Ltd v Kiukiang Maritime Carriers Inc (2000) 173 ALR 263 Jefferson Ford Pty Ltd v Ford Motor Company of Australia Ltd (2008) 167 FCR 372 Spellson v George (1992) 26 NSWLR 666 White Industries Aust Ltd v Commissioner of Taxation [2007] FCA |
| First Applicant: | STOLT-NIELSEN AUSTRALIA PTY LTD |
| Second Applicant: | STOLT TANK CONTAINERS B.V. |
| Respondent: | AUSSTAR COMMODITY & MARKETING PTY LTD |
| File Number: | MLG 1442 of 2012 |
| Judgment of: | Judge O'Dwyer |
| Hearing date: | 15 May 2013 |
| Date of Last Submission: | 15 May 2013 |
| Delivered at: | Melbourne |
| Delivered on: | 31 May 2013 |
REPRESENTATION
| Counsel for the Applicants: | Mr Harvey |
| Solicitors for the Applicants: | Holman Fenwick Willan |
| Counsel for the Respondent: | Mr Kumar |
ORDERS
Pursuant to s.17A of the Federal Circuit Court of Australia Act 1999, the Respondent pay the Applicants the sum of AUD$222,931.11 (equivalent of US$214,690 as at 30 May 2013, plus AUD$15,240), being:
i.US$155,750 for demurrage in respect of the first shipment;
ii.US$58,940 for demurrage in respect of the second shipment; and
iii.AUD$15,240 for freight in respect of the second shipment.
The Respondent pay the Applicants’ costs of and incidental to this proceeding, including reserved costs, as agreed and in default of agreement, to be taxed.
Otherwise, all extant applications are dismissed.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLG 1442 of 2012
| STOLT-NIELSEN AUSTRALIA PTY LTD |
First Applicant
| STOLT TANK CONTAINERS B.V. |
Second Applicant
And
| AUSSTAR COMMODITY & MARKETING PTY LTD |
Respondent
REASONS FOR JUDGMENT
Introduction
The application before me for determination is an Application in a Case filed by the Applicants pursuant to s.17A of the Federal Circuit Court of Australia Act 1999 (“the FCC Act”) or r.13.07 of the Federal Circuit Court of Australia Rules 2001 (“the FCC Rules”) for summary judgment against the Respondent for claimed container demurrage and unpaid freight charges.
In essence, under both provisions, if there is evidence of fact on which the claim is based and the Court is satisfied that the Respondent has
“no reasonable prospect of successfully” defending the claim, then judgment may be given on that claim.
The Applicants rely on two affidavits of Ms Maria Migunova which set out the facts and circumstances giving rise to the claims and also exhibit relevant documents. They also rely on affidavits of Mr Sean O'Farrell and Mr Gordon Lasker that confirm those matters referred to in Ms Migunova’s affidavits which set out their respective involvements. The Respondent relies on two affidavits of
Mr Nasir Ullah, a Director of the Respondent.
I have had the benefit of both oral and written submissions by all parties.
Background
The First Applicant is the Second Applicant's local agent in Melbourne. The Second Applicant is incorporated in the Netherlands, is the owner of a large fleet of tank containers and carries on the business of a global logistics and transportation service. The Respondent engaged the Applicants to transport crude glycerine, glycerol and glyce (“the cargo”) from Sydney, Australia to Chittagong, Bangladesh.
There were two shipments of the cargo under two Bills of Lading.
The first shipment under a contract of carriage is said by the Applicants to be evidenced by a Bill of Lading number 5074-4258-12, issued on 19 January 2012, which showed that 10 tank containers were employed to carry the cargo on the vessel “MSC Vienna”. That Bill of Lading showed the Second Applicant as carrier and named the Respondent as the “Shipper”.
That shipment on MSC Vienna left Sydney on 19 January 2012 and arrived at the Port of Chittagong on or about 16 February 2012. On arrival at the Port, the 10 tank containers were discharged from the vessel and placed into storage at the Port. Unhappily, the intended receiver failed to take delivery of the cargo and the 10 tank containers remain unpacked in storage at the Port of Chittagong to this day.
The above background facts are not disputed, save the question of whether the Bills of Lading evidence the contract of carriage. What is disputed, however, is an entitlement to any demurrage under the first Bill of Lading. The Applicants claim demurrage at the rate of US$35 per day accruing on each tank container since 2 March 2012 under the terms and conditions of the Bill of Lading.
A second contract of carriage was entered into on 29 January 2012 which was in turn evidenced, the Applicants maintain, by a Bill of Lading numbered 5074-10744-12. That second Bill of Lading, like the first, showed the Second Applicant as carrier and named the Respondent as “Shipper".
The second shipment of the same cargo was in 4 tank containers and transported on the vessel “MSC Claudia"; departing Sydney on 29 January 2012 and arriving at the Port of Chittagong on or about 28 March 2012. On arrival at the Port this cargo was discharged from the vessel and placed in storage. The intended receiver of the cargo again failed to take delivery and, as a result, like the first shipment, it remains unpacked at the Port to this day.
In total, therefore, 14 tank containers are held in storage at the Port of Chittagong.
The above facts as set out in respect of the second shipment are not contested. What is contested, however, is, as with the first shipment, the Applicants’ entitlement to claim demurrage. In respect of the second shipment, the Applicants’ claim demurrage at the rate of US $35 per day, which is said to have been accruing on each of the 4 tank containers since 5 April 2012.
In addition to challenging the Applicants’ entitlement to demurrage under the Bills of Lading, the Respondent also asserts that the 14 tank containers at the Port of Chittagong are in the custody and control of the Applicants’ agent. The Applicants deny this and assert that the tank containers are held by the Port authorities and Customs in Bangladesh and that the cargo contained in the first shipment is to be sold by Customs at auction as "abandoned cargo".
In respect of the second shipment, the Second Applicant was requested by the Respondent to hold over that shipment at Singapore pending the clearance of import permits in Bangladesh. The Second Applicant agreed to do so on the clear understanding that any additional charges, being freight and disbursements, that would arise as a consequence, would be paid by the Respondent. In emails passing, Mr Ullah confirmed the additional charges in the sum of AUD$14,579.19 was due and owing as a consequence, together with interest of AUD$1,150
(see email dated 28 November 2012). Subsequently, an error was discovered in the calculation which, when corrected, showed the amount owing as AUD$20,240, not AUD$14,579.19. On the same day
(28 November 2012) the Second Applicant received a confirmatory email from Mr Ullah agreeing that the freight and disbursements incurred by the hold over at Singapore were AUD$20,240.
On 7 December 2012 the Second Applicant received from the Respondent AUD$5,000 as the first payment of three instalments then agreed in respect of the extra costs incurred from the hold(
er)over at Singapore. Thereafter, there were some issues between the parties as to the payment of the balance by way of instalments, but it must be noted that no dispute arose as to the amount due. There were subsequent communications about payment of the balance, but the long and short of it is that no further moneys have been paid. There still remains, in respect of freight and disbursements incurred because of the hold over at Singapore, the sum of AUD$15,240. My understanding is that, in respect of the freight and disbursements, the Respondent does not dispute the claim.Whilst the above is a broad brush outline of the factual matrix concerning the claim, I will address below in more detail the facts and documentation highlighted by the Applicants in support of their application for summary judgment.
Submissions
The Applicants contend that the two shipments undertaken by them at the request of the Respondent were pursuant to contracts of carriage as evidenced by the Bills of Lading. It is further contended that the Bills of Lading contained the tank container demurrage clauses, which the Respondent has failed to pay.
Counsel for the Applicants drew the Court's attention to the two Bills of Lading with particular emphasis on the descriptions given to the parties and the statement on each that they are, indeed, contracts of carriage. In addition, those Bills of Lading by reference referred to the “carrier’s standard conditions of carriage” and, further, they state that they incorporate the Hague Rules or the Hague-Visby Rules, which govern contracts of carriage by sea. More specifically the Bills of Lading had the following printed clause in them:
This Combined Transport Bill of Lading is a contract of carriage between the parties to the Bill of Lading and Stolt Tank Containers B.V., herein referred to as “the carrier.” This Bill of Lading is subject to the carrier’s combined Transport Bill of Lading terms and conditions and the carrier’s general terms and conditions, (collectively referred to herein as the carrier’s standard conditions of carriage). The carrier’s standard conditions of carriage can be obtained upon request from the carrier or its representative, or online -
It was highlighted that in its Defence, the Respondent admits its receipt of the Bills of Lading upon the tank containers, with their cargo, being loaded on the two vessels. Mr Ullah deposes also to the reality of a contract between the Respondent and the First Applicant to carry goods from Sydney to Chittagong, and admits that those goods were carried to Chittagong as required under the contract of carriage.
In particular, the Court was referred to emails from the Respondent on 24 May 2012, 28 November 2012 and 5 February 2013 which showed that it considered itself liable to pay freight and demurrage.
The Court's attention was also drawn to the timing of the Respondent’s adoption of the defence that the Bills of Lading were not agreements to carry goods only after the Applicants issued these proceedings.
The Court’s attention was drawn, in respect of the first Bill of Lading, to the following printed term:
Tank demurrage terms 14 days free from day of arrival, thereafter US$35 per day until returned, free of residue, at our nominated Depot.
The only distinction in respect of that provision in the second Bill of Lading was the provision for only 7 days free from day of arrival.
The Applicants referred to Clause 5.1.1 of the Carriers Standard Conditions of Carriage which provides that the “Shipper”, namely the Respondent, is liable to pay freight and demurrage. The Carriers Standard Conditions of Carriage were and are readily attainable by a search of the Web and the Bills of Lading referred to the appropriate Website address.
Further, the obligation to pay demurrage was highlighted in passing emails which were sent on 6 and 8 March 2012. The Respondent in those emails was warned that demurrage was accruing under the first Bill of Lading. The Respondent did not cavil with the claimed demurrage in any timely manner subsequent to those emails until after proceedings were issued. Indeed, an email sent by the Respondent on 24 May 2012 shows the Respondent as accepting the
Second Applicant's right to charge demurrage.
Again, further warnings about the accrual of demurrage were sent to the Respondent in June and August 2012, with no consequent protest from the Respondent about the entitlement to demurrage. The first time, as stated, any claim by the Respondent that the Applicants were not entitled to demurrage was in this proceeding.
The Respondent’s principal contention is that where there are arguable disputes as to fact and law, ipso facto, it is inappropriate to enter judgment as sought by the Applicants. In his written submissions Counsel for the Respondent highlighted and relied heavily upon the authorities associated with applications for summary judgment prior to the provision in legislation of the “reasonable prospect” of success concept.
The Respondent contends that there are issues of fact and law in dispute which can only be resolved through a trial on the pleadings and evidence. He further contended that there are "many troubling issues both of fact and law in this matter". It is further contended that the evidence provided by the Applicants in support of their application for summary judgment does not state or demonstrate that the Respondent has no defence.
Of course, such bald statements such as those above, in themselves, do not constitute an adequate response to the Applicants’ application without being buttressed by particulars of the disputes of fact and law that the Respondent says should persuade me that there is a reasonable prospect of the Respondent successfully defending the claims.
Indeed, Counsel highlighted the following as being items in dispute and issues of law and fact that need ventilation before a determination can properly be made as to the Respondent’s prospects of success:
·the Applicants’ agent in Bangladesh took possession of the Bills of Lading and as a consequence has possession of the tank containers. Also associated with this contention is the further contention that, as a consequence, the Applicants have obtained consideration in terms of obtaining cargo of much greater value;
·there is a real dispute about the value of the goods held in the tank containers and the charges that are payable to Customs;
·the quantum of the claim is disputed, with reference to a discount offered by the Applicants of 70%;
·there is a dispute between the parties as to the nature of the contracts, with the Respondent contending they were limited to contracts of freight between the Port of Sydney and the Port of Chittagong. Associated with this dispute is the contention by the Respondent that the contract governing the shipment did not cover a right to demurrage. In essence, it is contended that the construction of the Bills of Lading is an issue in dispute which warrants ventilation as there are clearly, in the view of the Respondent, triable issues to be determined after evidence and argument on the law applying; and finally,
·there was a suggestion, prosecuted in effect by the Applicants’ Counsel in anticipation of a suggestion by the Respondent that the contracts of carriage were frustrated. The Respondent’s Counsel did not pursue this contention, but for fullness I have addressed it below.
The Respondent emphasised that it is for the Applicants to establish the facts that would justify a summary order in their favour.
Consideration
As stated, the Respondent in submissions was reliant to a significant degree on the earlier jurisprudence that governed applications for summary judgment. It is fair to say that they provided very good authority for the general contention that, for summary judgment to be entered, there needed to be a demonstration that the defence to a claim was "hopeless", "so obviously untenable that it cannot possibly succeed" and "manifestly groundless".[1]
1 See Dey v Victorian Railways Commissioners (1949) 78 CLR 62 and General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125.
In more recent times, however, with the introduction through legislative change of the concept of “no reasonable prospect of successfully defending the proceeding”, or “no reasonable prospect of successfully prosecuting the proceeding”, those very strict and limiting authorities do not carry the same weight as previously; although it is (
un)fair to say that they do emphasise the caution needed to be taken by the Courts. In respect of s.17A of the FCC Act, it provides for a balance against those early authorities in that, in subsection 3, it states:For the purposes of this section, a defence or a proceeding or part of a proceeding need not be:
(a ) hopeless; or
(b) bound to fail;
for it to have no reasonable prospect of success.
There is now much authority as to the interpretation and application of the expression "no reasonable prospect of success”, both as it is used in the FCC Act and the FCC Rules, but also in respect of s.31A of the Federal Court of Australia Act 1976 (“the FCA Act”) which has a like provision.[2]
[2] See Federal Court decisions in various contexts that consider application of s.31A: Jefferson Ford Pty Ltd v Ford Motor Company of Australia Ltd (2008) 167 FCR 372; Desai v Keelty [2009] FCA 1280; Fortron Automotive Treatments Pty Ltd v Jones (No 2) [2006] FCA 1401.
A useful summary of the present law can be found in the High Court's consideration of s.31A of the FCA Act in Spencer v The Commonwealth of Australia.[3] In this decision, the majority of the Court observed that a power under s.31A of the FCA Act (in this instance, s.17A of the FFC Act or r.13.07 of the FCC Rules) may be exercised if:
a)the Court is satisfied that the defence has no reasonable prospect of success;
b)the power to dismiss an action summarily is not to be exercised lightly;[4]
c)the legislative intent of the provision will be defeated if its application is read as confined to cases of the kind which fell within an earlier, different procedural regime;
d)it is not necessary to demonstrate certainty of failure (in the sense of the defence being hopeless or bound to fail) in order to show that the defence has no reasonable prospect of success, and in that respect there is now a less demanding assessment of the merit of a defence; and
e)the Court should nevertheless proceed with caution on an application for summary judgment.
[3] [2010] HCA 28.
[4] See also University of New South Wales v Huang [2011] FCA 673; White Industries Aust Ltd v Commissioner of Taxation [2007] FCA 511.
In respect of s.31A of the FCA Act, the Federal Court has observed that:[5]
[5] For an overview of the development of the jurisprudence in this area, see Ejueyitsi v Commissioner of Police (W.A.) [2013] FMCA 120.
a)a Court must be satisfied that the Respondent has no reasonable prospect of successfully defending the claim;
b)the Court need not be satisfied that the defence is hopeless and bound to fail;
c)Parliament’s intention of introducing the provisions concerning summary judgment was to lower the bar for obtaining summary judgment (including summary dismissal) below that previously fixed by authorities like Dey v Victorian Railways Commissioners[6] and General Steel Industries Inc v Commissioner for Railways (NSW)[7] and others which required that the allegations/defences to be so clearly untenable that they could not possibly succeed;[8]
d)there was not an intention on Parliament’s part to remove the bar completely, and the Court must be very cautious not to do a party an injustice by summarily dismissing proceedings or, in this case, summarily entering judgment;
e)evidence of an ambivalent character will usually be sufficient to amount to a reasonable prospect of success in a case where evidence can give colour and context to allegations. Where questions of fact and degree are important, a Court should be more reluctant to dismiss a proceeding (or enter judgment) on the face of the pleading;
f)it is not Parliament’s intention to require a Court to engage in lengthy and elaborate trials on an interlocutory basis for the purposes of determining whether or not a proceeding has no reasonable prospect of success. It may be necessary for opposing parties to provide more than an outline of evidence, sufficient to show that there is a genuine dispute, to prevent the summary application before a trial;
g)if there is a real issue of fact or law to be decided, and the rights of the parties depend upon it, it is obviously appropriate that the matter goes to trial. It cannot be said, where there is a real factual dispute and that factual dispute must be resolved to determine whether the claim succeeds, that there is “no reasonable prospect of success;”
h)in determining if there are real issues of fact in dispute so as to preclude summary judgment, the Courts must draw reasonable inferences in favour of the non-moving party;
i)a summary judgment proceeding ought not be used to shut out proceedings where, like propositions of law, there may be real doubt; questions of law, and enquiry as to the merit, should not be for the purpose of resolving them and also not simply to determine whether the argument is hopeless, but in order to decide if it is sufficiently strong to warrant the trial;
j)the mere presence of a trifling, implausible, tenuous or tangentially relevant factual controversy is not a bar to the exercise of summary dismissal power; and
k)what is required is a prediction of the outcome of the trial on its merits, but not an actual adjudication of those merits such that a court ought not dismiss a claim based on a predictive assessment of prospects, where it is possible that if the claim went to trial, it may succeed.
[6] (1949) 78 CLR 62.
[7] (1964) 112 CLR 125.
[8] See Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87; Spellson v George (1992) 26 NSWLR 666; Theseus Exploration NL v Foyster (1972) 126 CLR 507; Webster v Lampard (1993) 177 CLR 598 and Cosmos E-C Commerce Pty Ltd v Sue Bidwell & Associates Pty Ltd [2005] NSWCA 81.
Conclusion
In determining this matter, I was very cognisant of the above outline of the law, in particular, the obligation imposed on a Court not to summarily enter judgment lightly; that such action by Courts is infrequent.
Having said that, I have come to the conclusion that the evidence presented, supported as it is by uncontested documentary evidence which does not facilitate, in my view, much argument, despite the assertion there is, as to their meaning and purpose, there is sufficient evidence in this case as presented to satisfy me that the Respondent does not have a reasonable prospect of defending the claims made by the Applicants.
The principal contention by the Respondent is that there is no contract between the parties that provides for demurrage to be charged. The Respondent appears to have adopted two contentions on this issue. First, the Bills of Lading relied upon by the Applicants do not constitute a contract of carriage, and secondly, if they are such, they do not provide for demurrage to be claimed.
On the face of the Bills of Lading, in my view, there can be no doubt they constitute the contracts of carriage between the parties. By way of express reference, on the face of the Bills of Lading, this is said to be the case. Also, by necessary implication, the incorporation of the Hague Rules and the Hague-Visby Rules into the Bills of Lading can serve no other purpose than to characterise them as contracts of carriage as there would be no facility in incorporating them otherwise, as they govern the carriage of goods at sea. It has been long understood that Bills of Lading can be used as contracts of carriage and it has been long established international practice to do so.[9] There are admissions by the Respondent in its Defence that there was a contract for the carriage of the cargo between the parties from Sydney to Chittagong and statements to that effect by Mr Ullah in affidavits deposed to by him. The only evidence of the contract of carriage was the Bills of Lading.
9 See BHP Trading Asia v Oceaname Shipping Ltd [1996] 67 FCR 211 and Hi-Fert Pty Limited v Kiukiang Maritime Carriers Inc (2000) 173 ALR 263.
A reading of the Bills of Lading show that the carrier’s standard conditions of carriage are incorporated in the contract of carriage as evidenced by the Bills of Lading and that under those standard conditions it is clearly spelt out the obligation to pay demurrage and when that obligation is enlivened, and at what rate it is to be paid.
The suggestion that there is a real dispute as to the value of the cargo held in Chittagong, and as such it should entitle the Respondent to ventilate its defence in a trial, is without merit. If such a dispute subsists, it is one between the Respondent and the Chittagong Customs or the intended receiver of goods. It is clearly irrelevant to the contract of carriage between the parties to this proceeding.
In respect of the Respondent’s contention that the Applicants’ agent in Chittagong had possession of the Bills of Lading and, ipso facto, the tank containers are in the possession of the applicants also has no merit. The evidence, which I accept, was that the Customs authority in Chittagong had the possession of the cargo and tank containers.
In respect of the issue as to whether there was a contract of carriage between the parties as alleged by the Applicants, there would appear to be no doubt whatsoever. The Respondent engaged the Second Applicant to transport the cargo from Sydney to Chittagong in the Second Applicant’s tank containers. That is admitted. In respect of the first shipment, the Respondent paid the full freight charges required. In respect of the second shipment, there is ample evidence in writing of the Respondent’s acceptance of the quantum of the freight charged, but not fully paid.
The suggestion that the contracts were frustrated, and this could only arise as the intended receiver/consignee refused to collect the cargo once in Chittagong, has no basis. The contract was to carry the cargo by sea from pier to pier, which part of the contract was fulfilled.
The “frustration” experienced by the Respondent was that associated with the intended receiver not fulfilling the contract between them, which is unrelated to the contract of carriage between the parties in this matter. It only goes to explaining the difficulties the Respondent has experienced in this trade endeavour with a customer in Bangladesh and, as stated in an email passing, its difficulty in paying freight and demurrage then owing; which also in a number of other emails from the Respondent was freely and expressly, and at times by way of confirmatory implication, admitted that demurrage was rightly payable.
In respect of the submission that, because the parties entered into negotiations about the payment of demurrage at a discounted rate (70%) and a payment scheme established, the Applicants were estopped from claiming more than the discounted amount, I say that through the default of the Respondent in complying with the payment regime agreed, there was not the required satisfaction and accord required under the agreement and no issue of estoppel arises as to the full balance of freight and demurrage owed to the Applicants.
Again, this process entered into between the parties is confirmatory of the clear understanding, in my view, that demurrage was rightly claimable.
Having regard to the above, there is no reasonable prospect, either in law or fact, of the Respondent successfully defending the Applicants’ claims[10] and accordingly there will be judgment in favour of the Applicants for the amounts rightly sought today in respect of demurrage, for outstanding freight and for costs. I will need to be provided, however, with the updated quantum of demurrage charges and any other charges or costs sought.
[10] See Granitgard Pty Ltd v Termicide Pest Control Pty Ltd [2008] FCA 55.
Costs
The Applicants sought an order for costs in consequence of the outcome of this proceeding. The Respondent opposed a full order for costs and submitted that it should be given some discount on costs because the Applicants initially prosecuted an application for summary judgment under different Rules which, in response to that initial application, necessitated the Respondent incurring costs unnecessarily as the matter proceeded under a much later application for summary judgment pursuant to s.17A of the FCC Act or r.13.07 of the FCC Rules.
In the exercise of my discretion on the question of costs, I am of the view that no allowance should be made as sought by the Respondent, as the merits of the substantive claim by the Applicants is manifest as set out above and the Defence by the Respondent is unmeritorious.
There will be an order for costs as is the usual order in these types of cases, even where the final outcome is based upon a different procedural process than first initiated.
I certify that the preceding forty-nine (49) paragraphs are a true copy of the reasons for judgment of Judge O'Dwyer
Associate:
Date: 27 June 2013
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