Robinson v Real Estate Agents Authority (CAC 20006)
[2014] NZHC 2613
•23 October 2014
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2014-404-2091 [2014] NZHC 2613
BETWEEN RODERICK ROBINSON
Appellant
AND
REAL ESTATE AGENTS AUTHORITY (CAC 20006)
First Respondent
YVONNE WAGNER Second Respondent
Hearing: 22 October 2014 Appearances:
T Rea for Appellant
L Clancy for first respondentJudgment:
23 October 2014
JUDGMENT OF LANG J
[on appeal against decision of Real Estate Agents DisciplinaryTribunal]
This judgment was delivered by me on 23 October 2014 at 4 pm, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date……………
ROBINSON v REAL ESTATE AGENTS AUTHORITY (CAC 20006) [2014] NZHC 2613 [23 October 2014]
[1] The appellant, Mr Robinson, is the manager of the Pukekohe branch of the real estate agency operated by Barfoot & Thompson Ltd.
[2] On 30 July 2013, a Complaints Assessment Committee (CAC) established under Part 4 of the Real Estate Agents Act 2008 (the Act) found Mr Robinson guilty of unsatisfactory conduct under s 72 of the Act.1 The CAC made that finding when it determined a complaint regarding the manner in which Mr Robinson’s agency had dealt with the sale of a property formerly owned by the second respondent, Dr Wagner, and her estranged husband, Mr Rawnsley. On 5 November 2013, the CAC issued a decision as to penalty in which it censured Mr Robinson and ordered him to pay the sum of $500 to the Real Estate Agents Licensing Authority (the Authority).2
[3] Mr Robinson appealed to the Real Estate Agents Disciplinary Tribunal (the Tribunal) against the finding of unsatisfactory conduct. On 25 July 2014, the Tribunal issued a decision dismissing Mr Robinson’s appeal and confirming the CAC’s finding of unsatisfactory conduct.3 It set aside the censure, but increased the amount that Mr Robinson was required to pay to the Authority to $2,000. Mr Robinson now appeals to this Court against the Tribunal’s decision.
Background
[4] Dr Wagner and Mr Rawnsley were the owners4 of a rural property known as Perth House Farm, situated near Waiuku. They separated during 2010 and then became involved in an acrimonious relationship property dispute. They appeared to make some progress towards resolving this on 5 July 2011, when they entered into a heads of agreement (the heads of agreement) after participating in a mediation. The heads of agreement relevantly contained the following provisions:
3. Perth House Farm – sale
(a) The parties shall request the trustees of the Hopkinson Family
Trust to deal with the sale of the Perth House Farm as follows:-
1 Decision of Complaints Assessment Committee (CAC20006) Complaint No: 6874355, 30 July
2013.
2 Decision of Complaints Assessment Committee (CA20007) Complaint No: CB6874355, 5
November 2013.
3 Robinson v The Real Estate Agents Authority (CAC20006) [2014] NZREADT57.
4 In their capacities as trustees of the Hopkinson Family Trust.
(b) The farm shall be marketed for sale by auction;
(c) The parties shall each appoint an agent and they shall have a joint sole agency;
(d) Each party shall advise the other of their choice of agent by 5 pm 6 July 2011 via their counsel;
(e) The marketing programme for sale shall begin no later than 15
September 2011;
(f) The farm shall be auctioned for sale no later than 15 November
2011 on site;
(g) Any expenses required to ready the farm for sale shall not be incurred without agreement between the parties, but they agree to be guided on this issue by Marcus Corban. If either party incurs expenses for this purpose they shall be reimbursed from the net proceeds of sale;
(h) The reserve price shall be chosen by each agent which shall occur no later than 2 weeks before auction date. If there is no agreement as to reserve the median of the 2 reserves shall be the reserve price;
(i) If the farm does not sell at auction at the agreed reserve price, the parties shall:-
§Use their best endeavours to reach agreement as to a revised reserve price and method of sale; or
§Failing agreement above, to return to mediation to discuss the method and price for sale (inter alia) with Tony Lendrum;
(j) Pending sale of the farm the parties shall:-
(i) Maintain joint stewardship of the farm being responsible for its upkeep and maintenance;
(ii) Continue to occupy the farm, allowing the other party quiet enjoyment.
(k) Pending sale, Yvonne shall continue to meet mortgage, rates and other outgoings on the farm and Doug shall reimburse to Yvonne from his share of the nett proceeds of sale half of such expenses from 1 December 2010;
(l) Upon sale the nett proceeds of sale to be held in an independent solicitor’s trust account to be agreed between counsel for the parties, pending further agreement.
[5] Mr Rawnsley went overseas shortly after he signed the heads of agreement. During his absence, Dr Wagner sought to give effect to clause 3(c) of the agreement
by instructing Barfoot & Thompson’s Pukekohe office to act on her behalf in relation to the sale of the property by auction. In doing so, she did not deal with Mr Robinson. Instead, she dealt with Mr Michael Jenks and Ms Carol Burke, two real estate agents in Mr Robinson’s office. She listed the property for sale with Barfoot
& Thompson on 13 September 2011, two days prior to the date upon which the heads of agreement required marketing of the property to begin. Before doing so, Dr Wagner provided Mr Jenks and Ms Burke with a copy of the heads of agreement. Like Dr Wagner, they took that document to confer the necessary authority on Dr Wagner to list the property for sale with the agency notwithstanding the fact that Mr Rawnsley had not given them instructions to like effect.
[6] The listing agreement recorded the names of the appointed sales agents, and named the clients for whom the firm was acting as being both Dr Wagner and Mr Rawnsley. It also provided that Barfoot & Thompson was to receive commission in the sum of $54,000 based on an estimate that the property would sell for between
$1.9 million and $2.4 million. The agreement provided for the property to be sold by auction on 29 October 2011, and allowed for the sum of $3,447.00 to be spent on advertising.
[7] Mr Rawnsley returned from overseas in mid-September 2011. By that stage Barfoot & Thompson had begun advertising the property for auction, and had erected signage on it. When Mr Rawnsley learned of this, he sent a letter to Barfoot
& Thompson on 28 September 2011 pointing out that the agency had listed the property for sale without his approval. He also demanded that the firm was to desist from marketing the property forthwith. Barfoot & Thompson complied with that request by immediately ceasing to market the property.
[8] The agency received a letter from Dr Wagner’s barrister the next day, pointing out that the mediation agreement permitted both Dr Wagner and Mr Rawnsley to appoint their own agents to sell the property. The barrister therefore questioned the fact that Barfoot & Thompson had stopped marketing the property at Mr Rawnsley’s request.
[9] Mr Rawnsley subsequently instructed Harcourts to act on his behalf in relation to the sale of the property. Harcourts endeavoured to reach agreement with Barfoot & Thompson regarding the sale of the property, but the two firms were unable to reach agreement regarding the sale and auction process. Harcourts then withdrew from the process.
[10] Mr Rawnsley subsequently instructed Barfoot & Thompson to act on the sale of the property, and signed a listing agreement dated 12 November 2011. This provided for the property to be sold by auction on 15 December 2011. Dr Wagner never signed this agreement. As a result, the agency was left with two listing agreements, one signed by Dr Wagner and the other signed by Mr Rawnsley.
[11] Barfoot & Thompson then took further steps to market the property for sale. Following a second mediation on 16 November 2011, however, Dr Wagner agreed to purchase Mr Rawnsley’s interest in the property. Shortly thereafter, Dr Wagner discovered that Barfoot & Thompson had provided Mr Rawnsley with an opinion prior to the auction regarding the true value of the property. It had not given her the same information. She immediately confronted Barfoot & Thompson about this, and contended that the opinion had given Mr Rawnsley a negotiating advantage at the mediation that had effectively cost her the sum of $100,000. A further dispute then arose as to whether Barfoot & Thompson was entitled to commission on the sale of Mr Rawnsley’s interest in the property to Dr Wagner, and if so who was to pay it.
[12] These issues prompted Dr Wagner to lodge a complaint with the Real Estate Agents Licensing Authority about Mr Robinson’s conduct. This began the litigation that has led to the present appeal.
The complaint before the Complaints Assessment Committee
[13] Dr Wagner’s complaint contained several allegations. She claimed that the agency should not have stopped advertising the property without first advising her, and that it had a conflict of interest once it attempted to act on behalf of both herself and Mr Rawnsley. She also complained about several aspects of the manner in which Barfoot & Thompson dealt with her after it had accepted instructions from Mr Rawnsley to sell the property. These included the provision of the opinion regarding
the value of the property. Finally, she alleged that Barfoot & Thompson should not have attempted to charge her commission when she purchased Mr Rawnsley’ interest in the property and that the agency had harassed her regarding payment of the commission.
[14] After reciting the facts the CAC referred to the legislative provisions that it needed to apply in determining the complaint. These included s 72 of the Act, which provides as follows:5
72 Unsatisfactory conduct
For the purposes of this Act, a licensee is guilty of unsatisfactory conduct if the licensee carries out real estate agency work that—
(a) falls short of the standard that a reasonable member of the public is entitled to expect from a reasonably competent licensee; or
(b) contravenes a provision of this Act or of any regulations or rules made under this Act; or
(c) is incompetent or negligent; or
(d) would reasonably be regarded by agents of good standing as being unacceptable.
[15] The CAC also referred to the following rules from the Real Estate Agents Act
(Professional Conduct and Client Care) Rules 2009 (the Rules):
Rule 5.1A licensee must exercise skill, care, competence, and diligence at all times when carrying out real estate agency work.
Rule 6.2A licensee must act in good faith and deal fairly with all parties engaged in a transaction.
Rule 6.3A licensee must not engage in any conduct likely to bring the industry into disrepute.
Rule 9.1A licensee must act in the best interests of a client and act in accordance with the client’s instructions unless to do so would be contrary to law.
Rule 9.4 A licensee must communicate regularly and in a timely manner and keep the client well informed of matters relevant to the client’s interest.
5 Decision of the Complaint Assessment Committee, above n 1 at [3.1]-[3.6].
Rule 9.8When inviting a signature of an agency agreement a licensee must explain to a prospective client in writing –
(a) the conditions under which commission must be paid and how commission is calculated, including an estimated cost (actual $ amount) of commission payable by the client, based on the appraisal price of the land or business.
Rule 9.10A licensee must not submit an agency agreement or a sale and purchase agreement or other contractual document to any person for signature unless all material particulars have been inserted into or attached to the document.
[16] The only area in which the CAC held that Mr Robinson’s conduct fell below the standard required of a reasonably competent licensee was in relation to the drafting and execution of the two listing agreements. In this context the CAC observed:
4.3The Committee accepts that Mr Rawnsley was out of the country when the listing agreement was signed. Nevertheless, Michael Jenks and Carole Burke were provided with a copy of the mediated agreement at the time and were aware or should have been aware of why they were being appointed and should have confirmed with the Complainant whether she had authority to sign on behalf of Mr Rawnsley. The Committee is of the view that the listing agreement was not valid as it did not have the signature of the other trustee. Accordingly, the Committee finds that the Licensee has breached the Rules and the Act.
…
4.8The Committee must now consider the drafting of both listing agreements. As earlier stated, the Committee is of the view that the listing agreement between the Complainant and the Agency was invalid. It is also of the view that the listing agreement with Mr Rawnsley is also invalid for two reasons. Firstly, the legal owner of the Property was the Hopkinson Trust which was not inserted in the listing agreement and secondly, the Complainant had not signed the listing agreement, when advice had been given by Mr Rawnsley’s solicitor that both trustees must sign all contractual documents.
4.9The Committee finds that the Licensee in his position as branch manager of the Agency should have exercised more care, competence and diligence in the listing of the Property. The Licensee knew or should have known that it is best practice to insert the name of the trust and have every trustee sign to minimise the risk of challenges to the validity of the documents. For both listings of the Property to be incorrectly executed in relation to ownership, signing authority and the failure to include an estimated cost in an actual dollar amount of the commission payable, falls short of the standard that a reasonable member of the public would be entitled to expect from a reasonably
competent licensee. Accordingly, the Committee finds that the
Licensee has breached the Rules and the Act.
The appeal to the Tribunal
[17] The Tribunal did not consider that Mr Robinson’s actions in relation to the second listing agreement fell below the standard required of a competent real estate agent. It took a different view, however, of his conduct in allowing the property to be listed and marketed at Dr Wagner’s request. Rather than paraphrase the Tribunal’s reasoning, it is appropriate to set out those paragraphs of the Tribunal’s decision in which it reached this conclusion.
[18] The Tribunal’s reasoning was as follows:6
[39] We agree that it is crucial for licensees to check certificates of title before listing properties and marketing them for sale. This is important so that all registered owners provide their written authority for the sale. If one registered owner is signing on behalf of another, licensees must check to see that that registered owner has authority to do so.
[40] The Authority does not dispute that the licensee sought confirmation from his salespersons that the complainant had Mr Rawnsley’s authority to sign on his behalf. However, we agree that the complainant’s “say so”, on its own, was not sufficient proof of her authority to sign on behalf of Mr Rawnsley.
[41] With regard to the submission that Mr Rawnsley’s authority was contained in the mediation agreement itself, counsel for the Authority submits that this also was not enough. Indeed, in our view that agreement does not provide or infer any authority for one spouse to sign a listing for the other. The mediation agreement required each party to appoint an agent. These agents were to have a joint sole agency. Each party was to advise the other of their choice of agent by 6 July 2011. The mediation agreement said nothing about Mr Rawnsley providing the complainant with authority to sign a listing agreement on his behalf; nor could that be inferred. The agency could not list and market the property on the signature of one owner alone; the mediation agreement did not permit this. Nor is this otherwise permissible. An agent must have the written authority of all owners in order to market and sell a property.
[42] In the circumstances of this case, it is submitted for the Authority that the licensee should have required his salespersons to obtain authority from Mr Rawnsley directly. As the Committee recognised, the authority to sign the listing agreements was not properly checked for either listing. The licensee, as branch manager, should have exercised more care, competence, and diligence in the listing of the property.
6 Robinson v The Real Estate Agents Authority (CAC20006), above n 3.
[43] Another issue raised by the appellant is whether the Committee made an error of law in expressing its view that the Hopkinson Trust was the “legal owner” of the property. We agree that, as far as the listing agreement was concerned, it was necessary only for the persons whose names were listed on the certificate of title to be stated on the listing agreement. However, it was necessary for each of these persons to provide their written authority for the listing. This is the position the licensee soon accepted was correct following issues being raised by Mr Rawnsley. The persons shown on the title as owners must all sign a listing agreement if the property is for sale, subject to one owner holding a valid power of attorney from another.
…
[45] As Ms Pridgeon put it, the listing of the property started wrongly. The licensee was apparently alive to the issues surrounding this listing from the outset, but his supervisory advice to his salespersons was inadequate. It is crucial for agents to properly obtain authority from all registered owners prior to listing and marketing a property, particularly in the circumstances of this case where there is acrimony between those registered owners. It is put for the Authority that, in this case, the agency required more than the complainant’s say so that she had Mr Rawnsley’s authority to list the property. We emphasise that there will always be a need for authorising signatures and a “say-so” will never be adequate to comply with the Act and its Rules.
…
[47] The mediation agreement of 5 July 2011 did not give sole listing authority to Dr Wagner, or imply that. Accordingly, for a time the property was listed in a non-compliant manner. When Dr Wagner asserted that she alone could list the property, if the agents were doubtful whether Mr Rawnsley also needed to sign, the licensee should have obtained competent legal advice which should have confirmed that Mr Rawnsley’s signature was also, of course, needed as well as Dr Wagner’s for the property to be validly listed. The licensee did get some legal advice, as covered above, but not until 29 September 2011. He then correctly decided that both registered proprietors needed to sign any listing authority despite the legal advice suggesting otherwise. We doubt whether the barrister in question could have been properly briefed. Also, as indicated above, the barrister was not asked to focus on the Act and its Rules.
[48] Simply put, we are concerned that for a time (13 September 2011 to
28 September 2011) the property was listed in a deficient, and ineffective, manner without the signature of Mr Rawnsley.
…
[50] However, in his evidence, the licensee put it that the barrister’s letter of 29 September 2011 seemed to provide “sufficient authority by Doug for Yvonne to appoint Barfoot & Thompson as an agent”. The licensee seemed to be saying that his two agents relied on the mediation agreement for them to market the property without the signature of Mr Rawnsley and that the subsequent legal advice confirms the validity of that. In the course of his cross-examination, the licensee also made the point that, although he accepted that one vendor could not sign for the other, there was authority in
the mediation agreement for each owner to appoint an agent. However, it does not follow from that that both signatures were not required for listing.
[51] A submission from Mr Rea (counsel for the licensee) is that the mediation agreement does imply authority for one vendor to list for the other. We respectfully disagree. The mediation agreement of 5 July 2011 simply does not give or imply authority for one vendor to sign a listing agreement on behalf of the other. We have made our views clear above but we take into account that the issue, whether Dr Wagner had authority to list the property for both herself and Mr Rawnsley, did become confused.
…
[56] When there is a situation of one registered proprietor purporting to have authority to list on behalf of another registered proprietor and, particularly, when it is known that there is a serious estrangement between those two persons, much better checks and investigations were needed than those implemented to some extent by the licensee. There was clearly a position of conflict between the two registered proprietors. Dr Wagner seems to have been quite forceful in asserting rights which she did not have. The licensee should have had the position checked out better than he did.
[57] We think that a benefit of the hearing before us is that we were provided with more extensive evidence and argument than was the Committee. The failing by the licensee was not particularly serious in all the circumstances of this particular case; but it is elementary that the signatures of registered proprietors of a property must be obtained for a valid listing unless there is a valid power of attorney available for one or more of those persons. Also, agents must be even more alert when becoming involved in selling a property consequential to a marriage breakup.
…
Decision
[19] The passages set out above make it clear that the Tribunal considered Mr Robinson should not have allowed the property to be listed without obtaining Mr Rawnsley’s express authorisation to act on the sale. They also suggest Mr Robinson ought to have ensured the agency obtained Mr Rawnsley’s signature on the listing agreement before -acting on the sale of the property. The Tribunal’s view that the heads of agreement did not entitle Dr Wagner alone to instruct Barfoot & Thompson to act in relation to the proposed sale underpinned both these conclusions.
[20] There is no express requirement in either the Act or the Rules that an agent must obtain either the express authority or signatures of all the owners of a property when it is listed for sale. There is, however, a requirement under r 5.1 that an agent must act with “skill, care, competence and diligence” at all times when carrying out
his or her duties. The Tribunal’s observation7 that Mr Robinson should have “exercised more care, competence and diligence when listing the property” suggests that it considered Mr Robinson breached the standards imposed by r 5.1 when he allowed the property to be listed.
[21] Counsel for the Authority properly emphasised that the Tribunal has expertise in this area, and that in applying the Act and Rules regularly it has primary responsibility for setting appropriate standards of conduct within the real estate industry. It also maintains constant oversight over the industry as a whole. For that reason he submitted that this Court should not lightly substitute its own standards for those set or imposed by the Tribunal.
[22] I accept these submissions without reservation. I also accept that an agent would ordinarily be wholly remiss if he or she did not obtain the express authority of all the owners of a property when it is listed for sale. The problem with that approach in the present case is that this was not an ordinary case. It differed significantly from the usual situation because the owners of the property, Dr Wagner and Mr Rawnsley, had reached their own agreement regarding the process by which the property should be sold. Whether or not Mr Robinson and his staff met the standards imposed by r 5.1 (or any other legislative requirement for that matter) must be judged having regard to that fact.
[23] The Tribunal clearly considered that the terms of the heads of agreement did not affect the requirement that an agent must have the written authority of all the owners of a property before listing it for sale. As the passages set out above demonstrate, this was one of the key factors in the Tribunal’s ultimate decision. The interpretation of written contracts is one of the core functions of this Court. For that reason it is well placed to determine whether the Tribunal’s decision regarding the legal effect of the heads of agreement was correct.
[24] Dr Wagner and Mr Rawnsley obviously signed the heads of agreement in circumstances where they had earlier been able to reach agreement about very little.
I consider that the wording used in the agreement was designed to prevent either
7 At [42], set out above at [18].
party from being able to unilaterally obstruct or delay the sale of the property in the future. In order to prevent that occurring, the parties effectively agreed that they would not attempt to appoint a real estate agent who would be acceptable to them both. They obviously took that step because they knew they were unlikely to be able to reach agreement regarding that issue. Instead, they agreed that each party would instruct his or her own agent to act on the sale of the property. Those two agents would then market the property for sale under a joint sole agency. Dr Wagner and Mr Rawnsley obviously hoped or anticipated that the two agents would be able to agree upon a joint marketing and sale process in order to begin advertising the property for sale no later than 15 September 2011.
[25] Given that background and the clear wording used in the document, I do not consider the heads of agreement required each party to approve the agent appointed by the other. Nor did it require each party to authorise the agent appointed by the other to act on the sale of the property, or require each party to sign a listing agreement with the agent appointed by the other. Rather, each party was free to appoint an agent to act on the sale without reference to the other. The only obligation that each party had following appointment of the agent was to advise the other party of his or her choice of agent no later than 5 pm on 6 July 2011. The terms of the heads of agreement therefore provided express authority for the agents appointed by each party to list and advertise the property for sale by auction.
[26] This arrangement obviously left some significant issues to be determined by the two appointed agents. They were required to reach agreement regarding the marketing and sale process, and the terms and conditions upon which the auction was to proceed. The agents would also need to reach agreement with each other and the parties about important issues in relation to the payment of commission. Regardless of these matters, however, the important point about the arrangement for present purposes is that each party was free to instruct his or her agent without reference to the other. For that reason I do not agree that Mr Robinson fell below the standard required of a competent real estate agent in agreeing to list the property for sale based on Dr Wagner’s instructions alone. He was not legally or ethically required to obtain Mr Rawnsley’s signature or approval to Barfoot & Thompson’s appointment as Dr Wagner’s agent.
[27] This conclusion significantly undercuts the basis upon which the Tribunal found Mr Robinson guilty of unsatisfactory conduct. It does not, however, completely remove the basis for the Tribunal’s decision.
[28] Reading the Tribunal’s decision as a whole, it is clear that the Tribunal also considered that Barfoot & Thompson should not have marketed the property until such time as the agency had reached agreement with Mr Rawnsley or his appointed agent regarding the manner in which the property was to be marketed and sold.
[29] Counsel for the Authority submitted that Mr Robinson breached r 9.15 of the Rules when he allowed the property to be marketed without first obtaining Mr Rawnsley’s authority or consent. Rule 9.15 provides as follows:
Advertising and marketing
9.15Unless authorised by a client, through an agency agreement, a licensee must not offer or market any land or business, including by putting details on any website or by placing a sing on the property.
[30] My earlier conclusion that the heads of agreement expressly authorised Dr Wagner alone to appoint Barfoot & Thompson as one of the agents who were to list and market the property effectively deals with this submission.
[31] Counsel for the Authority also relied upon the fact that the sale process prescribed in the heads of agreement was to be undertaken by the two appointed agents under a joint sole agency, and not by Dr Wagner’s appointee alone. This is correct as far as it goes, but it ignores the fact that Mr Rawnsley was not prepared to honour his obligation under the heads of agreement to appoint his own agent. Once that occurred, I do not consider that Barfoot & Thompson were prevented by r 9.15 or any other ethical obligation from assisting Dr Wagner to meet her own obligations under the same document. I consider that the actions of the agency in that situation clearly met the standards imposed by the rules referred to above at [15].
[32] I acknowledge, however, that Mr Robinson and his agency undoubtedly took a risk when it began marketing the property without first reaching agreement with Mr Rawnsley and/or his appointed agent regarding the marketing and sale process. In doing so Barfoot & Thompson exposed itself to the risk that Mr Rawnsley would
later challenge that process, and also refuse to be responsible for the payment of commission. In the end, however, that was a risk the agency was obviously prepared to take in order to assist Dr Wagner to give effect to the heads of agreement.
[33] It follows that I do not agree that Mr Robinson breached r 9.15 or was guilty in any other way of unsatisfactory conduct when he allowed his agency to begin marketing the property without Mr Rawnsley’s consent.
Result
[34] The appeal is allowed. The finding of unsatisfactory conduct is set aside, as is the order requiring Barfoot & Thompson to pay the sum of $2000 to the Authority.
Costs
[35] Mr Robinson is the successful party on the appeal, and would therefore ordinarily be entitled to an award of costs. I am conscious, however, that neither counsel addressed this issue during the hearing or in written submissions. If counsel cannot reach agreement on costs, I invite counsel for Mr Robinson to file a short memorandum (no more than four pages in length) and I will then give directions for
filing of a memorandum in response.
Lang J
Solicitors:
Glaister Ennor, Auckland
Meredith Connell, Auckland
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