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High Court of Fiji |
Fiji Islands - Navoka v The Permanent Secretary for the Public Service - Pacific Law Materials
IN THE HIGH COURT OF FIJI
AT SUVA
CIVIL JURISDICTION
CIVIL ACTION NO. 344 OF 1996
BETWEEN:
VILIAME RATUMAIMURI NAVOKA
Plaintiff
AND:
1. THE PERMANENT SECRETARY FOR THE PUBLIC SERVICE
2. THE PERMANENT SECRETARY FOR FOREIGN AFFAIRS
3. THE ATTORNEY-GENERAL OF FIJI
Defendants
Mr. Rabo Matebalavu for the Plaintiff
Mr. S. Kumar for the Defendants
JUDGMENT
(On Assessment of Damages)
This is the hearing of assessment of damages further to admission of liability by the defendants on 13 June 1997 when judgment was entered with damages to be assessed.
Background facts
The Plaintiff was at all material times the Consul-General for the Republic of Fiji to Sydney, Australia after having been seconded from the Fiji Trade and Investment Board. By an agreement in writing made on 21 May 1993 (the "contract") and executed between the Plaintiff and the first defendant the Government of Fiji (the "Government") the latter agreed to employ him to serve them as the Consul-General based in Sydney, Australia for a period of three years commencing 16 June 1993 unless determined under the provisions of the contract.
Under the contract the Plaintiff was entitled to (a) an annual salary of $34,878.00, (b) privileges or allowances etc normally enjoyed in that post, (c) 'leave' in accordance with the 1988 Leave Regulations (d) 'leave salary' at the rate payable under the 1988 Leave Regulations and (e) FNPF contributions by the Government.
It was a term of the contract that the Plaintiff's appointment could be determined by one month's notice on either side or by either party paying one month salary in lieu of such notice. For details see Clauses 7 & 8 of the contract set out hereafter.
In breach of the contract and without giving the Plaintiff a month's notice in writing or any notice to terminate the said service or payment in lieu thereof, the defendants purported to determine the agreement thereby terminating the Plaintiff's service to Government as Consul-General before the said term of three years expired. Consequently the Plaintiff says that he has been deprived of the salary, privileges and allowances etc he would otherwise have earned and he has thereby suffered loss and damage.
The Plaintiff's claim is as set out in his Statement of Claim herein which includes (a) loss as particularised under 'Particulars' in the Statement of Claim, (b) special damages, (c) general damages and (d) interest on damages.
Plaintiff's submission
Mr. Rabo Matebalavu for the Plaintiff submits that this claim arises out of the breach of contract in that the Government without any notice whatsoever to the Plaintiff unilaterally determined the agreement some 7½ months prior to the end of the agreed term of 3 years.
The Government has admitted liability and an order has been made accordingly with damages to be assessed.
The Plaintiff's claims are as follows (as stated in his submission):
(1) Special Damages:
(i) salary payable for the unexpired portion ("the balance period") of the 3 year contract.
(ii) leave salary payable for the balance period.
(iii) allowances payable for the balance period, under the Fiji Overseas Service Regulations.
(2) General Damages:
(a) plaintiff's bank(s) instalment defaults for the balance period.
(b) plaintiff's Home Finance instalment defaults for the balance period.
(c) plaintiff's bank loans:
National Bank of Fiji loan
Westpac Banking Corporation loan
(d) Fiji National Provident Fund withdrawal - loss of pension.
Mr. Rabo further submits that the plaintiff is entitled to the claims as stated in the Statement of Claim which includes Special Damages covering 'annual' and 'leave' salaries, 'allowances' under Fiji Overseas Service Regulations, claims for rent, water, electricity, telephone, transport, medical and education. Under General Damages he claims for loan instalment defaults, bank loans and FNPF pension etc.
Mr. Rabo submits that the measure of damages that the Court may consider is that the Plaintiff is entitled to receive all such amounts as he would have received if he had continued as Consul-General for the balance period. He further stated that as for allowances it is for the Court to grant as it deems appropriate.
Mr. Rabo further submits as follows under the head "general damages" (page 6 of submission):
Arising from Government's unilateral breach, and given the plaintiff's commitments with regard especially to his children's education, and in the light of Government's reluctance or rejection of the plaintiff's plea for extension of his stay to the end of December, the plaintiff was compelled to make alternative arrangements to enable his children to complete the education year.
The evidence is that the plaintiff, arising from resultant loss in salary and allowances during the balance period, withdrew part of the amount standing to his credit with the FNPF in order to meet loan repayments in Sydney for the education of his children (including those for whom no education allowance was payable). It is respectfully suggested that such act on the part of the plaintiff was entirely reasonable including as a direct result of the wrongful act aforementioned of Government.
It is submitted that the Court may properly award to the plaintiff all claims for allowances based on the Fiji Overseas Service Regulations as an incorporated and express term of the Contract.
Mr. Rabo stated that matters such as 'loan instalment defaults', 'bank loan' and 'FNPF Pension' etc. are matters which were in the reasonable contemplation of the parties as highly liable to result in the event Government fails (as it did) to find alternative employment for the plaintiff for the balance period.
Defendants' submission
Mr. Kumar for the defendants stated that the contract was signed on 21 May 1993 when the Plaintiff was seconded from the Fiji Trade and Investment Board; and on 17 August 1995 the Plaintiff was advised of Cabinet's decision to close the Consulate in Sydney with effect from 31 October 1995. The Plaintiff remained in Sydney until 31 December 1995 continuing to reside in a government-owned residence.
On measure of damages he said that the Plaintiff is entitled to sue for breach of contract for the estimated pecuniary loss resulting from the premature determination of service or termination without proper notice (McGregor on Damages 14th Ed. para 3636; Halsbury's Laws of England 4th Ed. Vol 16 at para 651).
The learned Counsel stated that the Plaintiff decided to retire from FTIB without the knowledge of the Government and that was at the time when in the middle of 1995 the Government was contemplating closing the Consulate as a cost-cutting measure.
Mr. Kumar submits that by way of damages the Plaintiff is only entitled to a month's notice as stated in the contract and certain allowances worked out proportionately based on a month's notice.
In law Mr. Kumar submitted as follows:
The measure of damages for wrongful dismissal is prima facie the amount that the Plaintiff would have earned had the employment continued according to the contract subject to deductions in respect of any amount received from any other employment which the Plaintiff in mitigating his loss either had obtained or reasonably could have obtained (see Beackham -v- Drake (1849) 2HLC579, 607-608).
In 1988 the Australian High Court further modified the above rationale in Gregory -v- Phillip Morris Limited (1988) 80 AL R 455 the High Court said "where the employment may lawfully be terminated by notice; a wrongfully dismissed employee will be entitled to no more than his wages or salary for the period of "proper notice" , reduced by his earning in actual alternative employment or such alternative employment as he should have taken up in accordance with his ordinary contractual duty to act reasonably to mitigate his loss - where the contract of employment is for a fixed or specific term and the parties have agreed a period of notice in the contract, the court will enforce that agreement giving effect to notice and in absence will imply a right to reasonable notice; Bunge (Aust.) Pty Ltd -v- Mallard (1984) 41 ALR 223.
This view was adopted by H.D. Palmer J in the case of Lepani Delai -v- The Minister of Communication, Transport and Works and AG, Civil Action 586/88 in delivering his judgment on 28/6/90.
According to Mr. Kumar the damage to which the Plaintiff is entitled to is as hereunder based on the authorities referred to by him.
Annual Rate 1 months
Salary 35,750 2979.16
Post Allowance
Location 11429 952.42
Rep. Supplement 6517 543.08
Rep. Allowance [1/3 off] 6354 176.50
Child Allowance [256x4] 10104 842.00
Total 5493.16
Leave Pay for 1 month 2979.16
Total $8472.32
On Superannuation Entitlements as claimed in item 14 of the Statement of Claim, Mr. Kumar says that the Plaintiff is not entitled to it. Similarly, for Privileges/Entitlement claims in item 15, he submits that it is discretionary but are not paid 'when it is not utilised'. This claim he says should be denied the Plaintiff. As for Claims in items 16, 17 and 18, he says that they are "too remote, far-fetched and fanciful and are not a direct consequence of the breach". He finally submits that the gross amount of damages is subject to taxation as the Court of Appeal said in AG v WAISALE NAIGULEVU F.C.A 22/89 at p 8:
We agree that it is as good law and equally good common sense that loss of earnings (and also loss of prospective earnings) should be calculated on the basis of net wages and not on the basis of gross wages ..... the object.... is to compensate the plaintiff what he has actually incurred and/or lost.
Consideration of the issue
I have given due consideration to the written submissions of Counsel.
It is agreed that the plaintiff was on contract for three years from the date he assumed the duties to serve the Government as Consul General of the Republic of Fiji to Sydney, Australia. The contract was signed on 21 May 1993 and the Plaintiff commenced duties on 15 June 1993. I have no doubt on the evidence before me that the contract was determined without notice to the plaintiff.
In regard to the terms of the contract, the salary and allowances the contract provides as follows:
2. The term of the engagement thereunder shall continue until the last day of the period of residential service of three (3) years referred to in sub-paragraph 2(1)(a) of this paragraph or as the case may be until the last day of any extension of such period or until the service of the officer is determined in any of the ways hereinafter mentioned.
3. The Government will pay the officer:
[a] in respect of the period of service an annual salary of $34,878 [Fixed and Personal to holder] plus any privileges or allowances, etc. which are enjoyed by Consul Generals of our Foreign Consulates.
[b] in respect of any period of leave granted to the officer in accordance with the terms of paragraph 5 of this Agreement, salary at the rate paid to the officer at the date of departure on leave.
The contract in clause 5 provides that the Plaintiff "shall be entitled to leave in accordance with the 1988 Leave Regulations".
Clause 7 of the contract is most relevant to the issue before me as it sets out the condition under which the Government may determine the contract. It provides:
7. Without prejudice to the provisions of paragraph 8 (relating to dismissal) Government may terminate this Agreement:
[a] by giving the officer not less than one month's notice in writing to the date upon which the Agreement will be terminated;
[b] at anytime by giving the officer one month's salary in lieu of the notice aforesaid:
[c] in the event of the officer being certified by a Government Medical officer as being medically unfit for service under this Agreement, by giving him one month's notice in writing of the date upon which the Agreement will be terminated.
There is also a clause which allows the Plaintiff to determine the contract. In this regard Clause 8 provides:-
8. The Officer may, after the expiration of three months' service, determine this Agreement:
[a] by giving not less than one month's notice in writing of the date upon which he proposed to terminate the Agreement:
OR
[b] at anytime by paying to the Government one months' salary in lieu of the aforesaid notice.
The issue
The issue for the Court's determination is whether the plaintiff is entitled to the claims which he has made in his Statement of Claim.
This was a "fixed term" contract, that is, for a term of three years. There was no notice given to the plaintiff terminating the contract in accordance with the above provisions in the contract which govern termination of the contract in this case.
Meaning of Fixed Term
The meaning and effect of 'fixed term' contract has been thoroughly dealt with by the Court of Appeal in DIXON and ANOR v BRITISH BROADCASTING CORPORATION (1979) 2 WLR p64.
Since I will be relying heavily on this case in deciding the plaintiff's entitlements, the following passage from the judgment of LORD DENNING MR in DIXON (supra) at p.650-651 is pertinent to the issue before me:
"Take this present case of Mr. Dixon. His last two contracts were for two months and another for four weeks, each containing a provision for a week's notice. Were those contracts for a "fixed term"? Looking at the general purpose and intention of the statute, each contract must have been employment for a "fixed term" within the meaning of the statute. Otherwise you get an absurd position. If a man was employed for four weeks (and there was no clause in his contract making it determinable by a week's notice) he can claim for dismissal when the four weeks come to an end. But by inserting in the contract a clause for a week's notice, the employer can get rid of any employee under the statute when the period of four weeks comes to an end. On the other hand, if the employer, within the four weeks, determines it by one week's notice. then he will be liable to answer a complaint of unfair dismissal. It would mean that an employer could always evade the Act by inserting a simple clause "determinable by one week's notice." That can never have been the intention of the legislature at all. The words "a fixed term" must include a specified stated term even though the contract is determinable by notice within its term". (underlining mine for emphasis)
Lord Denning at p.651 goes on to say that:
"We can and should give a consistent meaning to the whole of these provisions by holding that the words "fixed term" mean a specified term even though it is determinable by notice within that term."
The Master of the Rolls concluded by saying:
"In the result both these men, having been employed under contracts for a fixed term, can claim that they were dismissed. They can put in a claim before a tribunal. Then it will be for the employer to prove that the dismissal was not unfair and that there were good reasons for it."
As I stated earlier DIXON raised the question as to what is the meaning to be attributed to the phrase "fixed term". From what I have stated above with reference to Lord Denning's enunciation of the law, it is abundantly clear that the defendants' argument that the plaintiff is only entitled to a month's notice as Counsel has interpreted it does not hold any water.
If the defendants' arguments were to be accepted in this regard, it would "give rise to an intolerable absurdity" as SHAW L.J said in DIXON at p.652 while distinguishing DIXON'S case with an earlier decision of the Court of Appeal in BRITISH BROADCASTING CORPORATION v IOANNOU (1975) Q.B. 781 which had before it, inter alia, an issue whether it was a contract for a fixed term Lord Shaw said that the absurd result that would be produced as a result of the interpretation put in a certain statute that was being interpreted "in isolation" was not drawn to the attention of the Court in IOANNOU'S case. Lord Shaw said that "it may properly be said that the decision so far as that matter was concerned was per incuriam. It was moreover unnecessary for the ultimate determination of the appeal. In my judgment, therefore, with all respect to the view then taken that the decision ought not to be followed in regard to the meaning of "fixed term"."
Measure of damages
Now to the law on the subject of measure of damages.
In the text book TRADE UNIONS EMPLOYERS AND THE LAW by G.S. MORRIS & T.J. Archer 2nd Ed. para. 3.21 it is stated that:
".....If the employer does not terminate the contract in accordance with its terms (whether express or implied), the employee can sue the employer for breach of contract. The remedy will usually lie in damages" (underlining mine for emphasis)
Elaborating on the above statement in footnote I, they say:
"the employee is entitled to recover the loss which arises naturally in the ordinary course of things from the breach and also for any loss which it was reasonably foreseeable by the parties as being likely to arise from the breach. See McGregor, 1988".
In HILL v C.A. PARSONS & CO. LTD (1971) 3 All ER 1345 at 1350 DENNING MR stated what the employee's entitlement is after dismissal. He said:
"The servant cannot claim wages after the relationship had determined. He is left to his remedy in damages against the master for breach of contract to continue the relationship for the contractual period. He gets damages for the time he would have served if he had been given proper notice, less of course, anything he has earned or might have earned in the alternative employment".
(emphasis added)
For damages for unlawful dismissal, as in this case, I also refer to the text book PRACTICAL APPROACH TO EMPLOYMENT LAW (1982) by JOHN BOWERS at pages 129-130.
At p129 the author states:
"Damages are the normal remedy for breach of contract and the usual measure is the wages the employee would have earned if due notice had been given. For that is the only period when he is entitled by contract to continue in employment. If his contract can be determined by three weeks' notice he cannot claim his loss over the next three years even though he is unemployed for that length of time; for within that period at any time he might have been dismissed with three weeks' notice." (emphasis added)
He goes on to say:
"Very large measures of damages are available only where the contract is for a fixed term and cannot be terminated by notice. This is most usually the case in high status occupations like company directors, football club managers and accountants. The measure of damages is then similarly the amount which would have been earned in the unexpired part of the fixed term, but here there might be four or five years to run.
From the amount of damages so made up must be deducted sums to take account of: mitigation; taxation; and benefits received." (emphasis added)
In assessing damages in respect of employment for a fixed term, considerations which apply are as stated in the following passage from the book Macken, McCarry & Sappideen's THE LAW OF EMPLOYMENT 4th Ed. 1997 at p.296:
"for a fixed term not subject to termination by notice, damages will be equivalent to the salary or wages over the entire period - subject, however to reduction for likelihood of re-employment within the remaining contractual period, and the possibility of termination of the contract before the expiry of the period without fault on the part of the employer. Thus the Court is entitled to take into account the risk of ill-health, premature death, and the possibility of termination by reason of fraud or misconduct in determining the quantum of damages payable".
On the 'rule' which applies in a case where there is a breach of contract, ALDERSON B in HADLEY v BAXENDALE (1854) 9 Ex 341, 354-355 said:
"... We think the proper rule in such a case as the present is this: where two parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of such breach of contract should be such as may fairly and reasonably be considered either arising naturally, i.e. according to the usual course of things, from such breach of contract itself, or such as may reasonably be supposed to have been the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it."
In considering the Plaintiff's claims I have borne in mind the principles and guidelines stated in the cases referred to by Mr. Rabo in his written submission.
The Court of Appeal case of VICTORIA LAUNDRY v NEWMAN (1949) 2 K.B. 528, 539-540 is pertinent. There ASQUITH L.J said:
"... (1) It is well settled that the governing purpose of damages is to put the party whose rights have been violated in the same position, so far as money can do so, as if his rights had been observed. This purpose, if relentlessly pursued, would provide him with a complete indemnity for all loss de facto resulting from a particular breach, however improbable, however unpredictable. This, in contract at least, is recognised as too harsh a rule.
Hence,
"(2) In cases of breach of contract the aggrieved party is only entitled to recover such part of the loss actually resulting as was at the time of the contract reasonably foreseeable as liable to result from the breach.
"(3) What was at that time reasonably so foreseeable depends on the knowledge then possessed by the parties, or, at all events, by the party who later commits the breach.
"(4) For this purpose, knowledge 'possessed' is of two kinds; one imputed, the other actual. Everyone, as a reasonable person, is taken to know the 'ordinary course of things' and consequently what loss is liable to result from a breach of contract in that ordinary course. This is the subject matter of the 'first rule' in Hadley v. Baxendale. But to this knowledge, which a contract-breaker is assumed to possess whether he actually possesses it or not, there may have to be added in a particular case knowledge which he actually possesses, of special circumstances outside the 'ordinary course of things', of such a kind that a breach in those special circumstances would be liable to cause more loss. Such a case attracts the operation of the 'second rule' so as to make additional loss also recoverable.
"(5) In order to make the contract-breaker liable under either rule it is not necessary that he should actually have asked himself what loss is liable to result from a breach. As has often been pointed out, parties at the time of contracting contemplate not the breach of the contract, but its performance. It suffices that, if he had considered the question, he would as a reasonable man have concluded that the loss in question was liable to result.
"(6) Nor, finally, to make a particular loss recoverable, need it be proved that upon a given state of knowledge the defendant could, as a reasonable man, foresee that a breach must necessarily result in that loss. It is enough if he could foresee it was likely so to result. It is indeed enough ... if the loss (or some factor without which it would not have occurred) is a 'serious possibility' or a 'real danger'. For short, we have used the word 'liable' to result. Possibly the colloquialism 'on the cards' indicates the shade of meaning with some approach to accuracy...".
Some of the claims which I will disallow are so far-fetched that they do not arise from the breach. In this regard the following passage from the judgment of LORD REID in CZARNIKOW v KOUFOS (1969) 1 AC 350 at 385 is apt to show that these claims cannot be allowed:
"... I do not think that Alderson B. [in Hadley v. Baxendale] was directing his mind to whether something resulting in the natural course of events was an odds-on chance or not. A thing may be a natural (or even an obvious) result even though the odds are against it. Suppose a contractor was employed to repair the ceiling of one of the Law Courts and did it so negligently that it collapsed on the heads of those in court. I should be inclined to think that any tribunal (including the learned baron himself) would have found as a fact that the damage arose 'naturally, i.e. according to the usual course of things.' Yet if one takes into account the nights, week-ends, and vacations, when the ceiling might have collapsed, the odds against it collapsing on top of anybody's head are nearly ten to one. I do not believe that this aspect of the matter was fully causation and type of consequence rather than of odds...".
Consideration of plaintiff's claims
Having considered all of the evidence, I conclude that in all the circumstances of this case, the Plaintiff not having been given notice of termination of employment contract he will in the light of the authority of DIXON (supra), as I understand it, is entitled to full salary and other benefits referred to hereunder for the remainder of the contract period.
Under clause 3 of the contract the Plaintiff is entitled to: (a) the annual salary of $34,878 for the three year term, (b) privileges or allowances, (c) leave in accordance with the 1988 Leave Regulations (d) leave salary at the rate payable under the 1988 Leave Regulations, and (e) employer's FNPF contributions.
Disallowed claims: Claims under items 15, 16 & 17 of the Statement of Claim
On the evidence before me and in law all of these claims have no basis whatsoever. There the Plaintiff is emphasising, inter alia, the facts of the circumstances under which he entered into the contract and expects the Government (his employer) to meet his expenses (including future expenses) in regard to all imaginable items as enumerated in these items 15, 16 & 17. These claims do not flow at all from the breach. This Plaintiff was living beyond his means. If he wants to buy cars and indulge in investments and build a house then he has to meet them all from his own income and the employer has nothing whatsoever to do with all these commitments. If he commits himself up to the neck then that is his own funeral. The Plaintiff decided to retire from FTIB which he was entitled to do but that on evidence it has nothing to do with the contract hence no question of any pension payable to him arises. This was a contract which the Plaintiff entered into with his eyes open and the parties are governed entirely by its terms.
Once the Consulate closed the Plaintiff did not have to continue living in Sydney and incur the expenses which he is now claiming from his employer which include the ones I have disallowed. These claims are far too remote and do not by any stretch of the imagination flow from the breach to entitle him to claim them.
I therefore reject the Plaintiff's claim in items 15, 16 and 17 of the Statement of claim altogether.
Items allowed
I would allow items 1(a), (b) & (c) as claimed under item 13 of the Statement of Claim. The sum of $22,331.51 in item 1(a) is based on the Plaintiff's salary of $35750 per annum as at 31.10.95 when the Plaintiff ceased working for the Defendants. The sum of $1763.01 in item (1)(b) is the 'leave' amount which he would have earned if he had worked for the remainder of the contract period. The 'loss of living allowance' or 'post allowance' in item (1)(c) is for the unexpired term of seven and a half months. This item comprises of location allowance, representation allowance, representational supplement and child allowance (for what these expressions represent vide exhibit P6 p.23 Section E under the caption 'Post Allowance'). According to Plaintiff's evidence all these allowances (under 'post allowance') add up to A$34404 per year which comes to F$24339.01 for the period in question. The item in 1(d) against $1921.49 is disallowed as it is being duplicated and also the Plaintiff could not explain this claim when he testified.
It is in evidence that certain amounts have been advanced to the Plaintiff from time to time and these may not have been repaid. Also there is in evidence that there have been overpayments of allowances etc and debt owing on certain items which have not been settled. These aspects of the matter have to be sorted out and the figure arrived at has to be deducted from the damages awarded to the Plaintiff. It is ordered accordingly.
The claims in the items that I have allowed, I find, flow directly from the breach of contract and as already stated the defendants have admitted liability for the breach by terminating the contract in breach of its provisions.
A summary of the Plaintiff's entitlement as found by me on the whole of the evidence before me is as follows:
F$ C
(1) (a) Loss of salary for the period of
seven (7) months and fourteen
(14) days between 1st November 1995
and 15th June 1996. 22,331.51
(b) Loss of leave salary for thirteen (13)
working days for the period 1st
November 1995 to 15th June 1996. 1,763.01
(c) Loss of (living allowance) 'post
allowance' for seven (7) months and
fourteen (14) days between 1st November
1995 to 15th June 1996. 24,339.01
(d) Disallowed
Sub total $48,433.53
(2) Less tax deductions: From the above
entitlement in items (1)(a), (b) & (c)
the usual tax deductions have to be made
to arrive at the net figure on each of the
items - $
(to be calculated)
Sub total $
(3) Add FNPF contributions by employer:
to the net figure arrived at by deducting
item (2) from item (1) add the employer's
FNPF contributions on the salary and,
if applicable, on allowances in (1)(c) above. + $
(to be calculated)
(4) Add interest: The Plaintiff is entitled
to interest on the sums in item (1) and
(3) above at the rate of 8% per annum (21 August 1998)
from 1 November 1995 until today
+ $
(to be calculated)
Grand Total $
The figures for items 2, 3 and 4 have to be calculated by the Plaintiff.
There will therefore be judgment for the Plaintiff against the Defendants in the amount arrived at calculated on the above basis with costs against the defendants to be taxed unless agreed. It is further ordered that the Plaintiff repay the amounts advanced to him and not repaid, also that he repay any debt owing and any overpayments made which arose during his term of employment with the defendants in the post of Consul-General.
D. Pathik
Judge
At Suva
21 August 1998
Hbc0344j.96s
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