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Accident Compensation Cases

McGRORY v ANSETT NEW ZEALAND LTD (HC, 11/12/97)

Judgment Text

JUDGMENT OF SMELLIE J 
SMELLIE J
INTRODUCTION 
This is the defendant's application to strike out the first and second causes of action in the statement of claim issued by the plaintiffs. 
On Friday, 9 June 1995 at or about 9.22am near Palmerston North an aeroplane owned and operated by the defendant crashed. Three of the passengers were killed, and the balance injured, some of them very seriously. 
Arising out of that tragedy the survivors and administrators of the estates of those who perished have commenced this action. 
Three causes of action are advanced which may be summarised as follows: 
“(a)
Claims of reckless conduct by the defendant pursuant to s 31 of the Carriage by Air Act 1967 (‘CBA’), and for economic loss and special damages including hospital, medical and funeral expenses 
(b)
Claims pursuant to s 28 of the CBA for sums of up to $42,000 each by the plaintiffs as compensation for personal injuries suffered. 
(c)
Claims for exemplary damages by the surviving passengers. ”
The defendant accepts, (while firmly denying liability), that the third cause of action, (c) above, cannot be struck out on this application. So far as the first and second causes, (a) and (b) above are concerned, however, they are attacked on the basis that they cannot succeed, because they are precluded by the provisions of the Accident Rehabilitation and Compensation Insurance Act 1992 (“ARCIA”) and in particular s 14(1) of the same. 
STRIKE-OUT PRINCIPLES/IMMEDIATE DISPOSAL OF SOME MATTERS 
The application is made pursuant to rule 186(a) and (b) of the High Court Rules on the basis that no cause of action is disclosed or available and therefore the claims are an abuse of the Court's process. 
The leading authorities on rule 186 are well known and need not be rehearsed here. It is beyond question that the jurisdiction should be exercised sparingly and only if the causes of action attacked are clearly untenable — Takaro Properties Limited v Rowling [1978] 2 NZLR 314. It is also well established that if the application depends upon an issue of law (albeit a difficult one) then it is proper for the Court to grapple with it and resolve the issue. See Gartside v Sheffield Young & Ellis [1983] NZLR 37
The issue here is purely one of law. The central question is whether the claims pursuant to Part II of the Carriage by Air Act 1967 (“CBA”) which is the foundation of the first and second causes of action are untenable because of the provisions of ARCIA and, in particular, s 14 of the same. 
For the plaintiffs it was argued that on this strike-out application the Court should not decide the issue because a full investigation of the factual background would be required. Additionally it was argued, pursuant to Peerless Bakery Limited v Watts [1955] NZLR 339, and Bryan v Phillips (NZ) Limited (1993) 8 PRNZ, 446, that where the law is developing or evolving the action should not be brought to an end on a strike-out application. 
I am unable to accept those submissions. In my view the interpretation and inter-relationship of the provisions of ARCIA on the one hand and CBA on the other are pure matters of law and eminently suitable for decision at this stage of the proceedings. This is especially so since the pleadings allege such a clear factual situation — an aeroplane belonging to the defendant engaged on a domestic flight within New Zealand crashed, killing three people and injuring fifteen others, some seriously. And so far as the law evolving point is concerned — because the issue is one of statutory interpretation I see no room for the application of that principle. 
Another argument advanced was that the strike-out application should only be granted if it would completely dispose of the action. As a general rule that approach is, no doubt, sound. But counsel for the defendant was clearly right when he submitted that removing the claims for compensation for personal injury would eliminate a huge area of research and assessment, particularly as to the extent and permanence of injury suffered by the survivors. Here, the issue is discreet and can be easily severed from the claim for exemplary damages which is not challenged. Accordingly if the application otherwise should succeed the fact that it would not bring the whole matter to an end would not inhibit me 
THE RELEVANT STATUTORY FRAMEWORK 
Central to the case are various provisions of the Accident Rehabilitation and Compensation Insurance Act 1992 (“ARCIA”). In Part II of ARCIA under the heading “Cover and Relationship with Other Rights” the crucial provision, so far as the defendant is concerned is s 14(1) which provides as follows: 
“14. Application of Act excludes other rights — 
(1)
No proceedings for damages arising directly or indirectly out of personal injury covered by this Act or personal injury by accident covered by the Accident Compensation Act 1972 or the Accident Compensation Act 1982 that is suffered by any person shall be brought in any Court in New Zealand independently of this Act, whether by that person or any other person, and whether under any rule of law or any enactment. ”
Also of relevance from the plaintiffs' point of view is subsection (3)(b) of s.14 which provides: 
“(3)
Nothing in this section shall apply to any proceedings relating to, or arising from, — 
(a)
(b)
Any express term of any contract or agreement; or 
(c)
The unjustifiable dismissal of any person or any other personal grievance arising out of a contract of employment, but no compensation for personal injury covered by this Act or personal injury by accident covered by the Accident Compensation Act 1972 or the Accident Compensation Act 1982 shall be awarded in any such proceedings. ”
The defendant also relies on s 4(4) because it distinguishes between claims for damages arising out of personal injury associated with the carriage of passengers which is subject to an international convention (in this particular case the Warsaw Convention). That provision provides: 
“(4) Nothing in this section shall prevent the bringing of any proceedings for damages in any Court in New Zealand in respect of the personal injury or personal injury by accident suffered by any person, in New Zealand or elsewhere, if the cause of action is any liability for damages under the law of New Zealand pursuant to any international convention relating to the carriage of passengers. ”
Other provisions of ARCIA appropriately mentioned at this stage are s 4 which provides the definition of personal injury which includes death. Also the reference to cover in Part II of the Act, especially s 8 which provides for cover for personal injury occurring in New Zealand is a reference to entitlement to compensation under ARCIA. 
The plaintiffs' case, on the other hand, is based principally upon the provisions of the Carriage by Air Act 1967 (“CBA”) and specifically Part II of the same which deals with “Domestic Carriage by Air” (Part I dealing with International Carriage by Air). 
Within Part II of CBA there are a number of sections relevant to the plaintiffs' claim but principal among them is s 22 which is set out hereunder with the following notes in exactly the form in which it appears in Volume 18 of the Reprinted Statutes of New Zealand
22. Liability of the carrier for death or injury — Subject to the provisions of this Part of this Act, a carrier shall be liable for damage sustained by reason of the death of a passenger or any personal injury suffered by a passenger resulting from an accident which took place on board an aircraft or in the course of any of the operations of embarking or disembarking: 
[Provided that such liability shall not extend to nor include any passenger who at the time of the accident has cover in respect of the accident under [[the Accident Compensation Act 1982]] ] 
‘The proviso was added by s 184 of the Accident Compensation Act 1972 This addition is not affected by the repeal of the 1972 Act by the 1982 Act, see s 122(3)(a) of the Accident Compensation Act 1982 
In the proviso, the Accident Compensation Act 1982, being the corresponding enactment in force at the date of this reprint, has been substituted for the repealed Accident Compensation Act 1972 ’”
Associated with that Section, from the plaintiffs' point of view, is a reference to the Fourth Schedule of ARCIA which sets out the enactments that have been repealed and includes the Workers Compensation Amendment Act 1972 and the Accident Compensation Act 1982. 
Other provisions from Part II of CBA, to which Mr Miles drew attention, were the definition of personal injury in s 18 which is said to mean actual bodily harm and to include mental or nervous shock. Section 26, which comes close to providing absolute liability in that the onus is cast on the carrier to show that all necessary measures to avoid damage have been taken. Section 28 is important because it restricts liability in respect of each passenger to $42,000, as is s 31 which is the foundation for the plaintiffs' second cause of action and provides that the limits of liability referred to in s 28 shall not apply if there has been wilful or reckless misconduct on the part of the defendant. 
There are other statutory provisions that featured extensively in the arguments of counsel and they will be picked up and discussed in later sections of this judgment. There are three provisions of the Acts Interpretation Act 1924, however, that are ppropriate to set out here as follows: 
18.
Citation of Act includes citation of amendments — A reference to or citation of any Act includes therein the citation of all subsequent enactments passed in amendment or substitution of the Act so referred to or cited, unless it is otherwise manifested by the context. 
20.
General provisions as to repeals — The provisions following shall have general application in respect to the repeals of Acts, except where the context manifests that a different construction is intended, that is to say: 
(a)
(b)
The repeal of any enactment shall not affect any Act in which such enactment has been applied, incorporated, or referred to: ”
And s 21: 
“21.
Reference to repealed Act in unrepealed Act — 
(1)
In every unrepealed Act in which reference is made to any repealed Act such reference shall be construed as refering to any subsequent enactment passed in substitution for such repealed Act, unless it is otherwise manifested by the context. 
(2)
All the provisions of such subsequent enactment, and of any enactment amending the same, shall, as regards any subsequent transaction, matter, or thing, be deemed to have been applied, incorporated, or referred to in the unrepealed Act. ”
SUBMISSIONS OF COUNSEL FOR DEFENDANT AND THE CORPORATION 
The submissions for the defendant involve three basic propositions. First, that s 14 of ARCIA is a complete bar to the plaintiffs' claim. Secondly that the proviso to s 22 of CBA still applies despite the repeal of the Accident Compensation Act 1982. Thirdly, that the plaintiffs cannot avail themselves of the exception to the statutory bar contained in s 14(3)(b) of ARCIA to allow them to bring personal injury claims against the defendant. 
As to the defendant's first proposition i.e. that s 14 of ARCIA is a complete bar, Mr Gedye submitted that any inconsistency between s 22 of CBA and s 14 of ARCIA (and counsel submitted there was none) is resolved by the doctrine of implied repeal. Part II of CBA became law on 24 November 1967 prior to the introduction of the Accident Compensation Act 1972 when the statutory bar was introduced. This was repealed when the 1982 Act was enacted and although the bar in the proviso to s 22 of CBA was not specifically repealed in ARCIA the 1992 Act and, in particular s 14 of the same must prevail as expressing the proper intention of Parliament under the doctrine of implied repeal. (See Burrows, Statute Law in New Zealand (Butterworths 1992) at 210: 
“If two statutory provisions are totally inconsistent with each other, so that they cannot stand together, a Court will say that the latter in time impliedly repeals the earlier. ”
Quite apart from the doctrine of implied repeal, however, counsel submitted that the clear intention of Parliament in enacting s 14(1) of ARCIA was to maintain the policy set out in the two earlier Accident Compensation Acts which substituted rehabilitation and compensation for the right to sue for damages for personal injury. Counsel drew particular attention to the exception incorporated in s 14 in respect of international air travel, maintaining that the absence of a similar exception for domestic air carriage is conclusive. Furthermore, it was argued that if Parliament had intended to make such an obvious and significant exception to an otherwise blanket prohibition to sue for damages for personal injury it would have said so expressly and very clearly. 
The Court of Appeal decision in Childs v Hillock [1974] 2 NZLR 65, was relied upon and in particular the commentary of the Court of Appeal on s 14 of ARCIA where it was said at p.69 lines 15-21: 
“This Section (ie s 14(1)) is in similar terms to s 5 of the 1972 Act and s 27 of the 1982 Act, which both barred claims for damages where the person injured had cover under the particular Act. Section 14 of the 1992 Act continues the theme. It retains the bar that existed and extends it to injury covered by the new Act. There can be no damages claimed for injury covered by which ever of the Acts was applicable at the time ”
Counsel summarised this first point in his argument at paragraph 3.11 of his synopsis as follows. 
“Summary: 
Even if the proviso to s 22 CBA is ineffectual (denied) s 14 ARCIA, in any event, has paramount effect: The bar against proceedings applies notwithstanding s 22 CBA. The matter can be resolved in the plain and specific wording of s 14(1) of ARCIA. ”
The second proposition advanced by the defendant argued that the proviso to s 22 of the CBA still applies to bar claims for personal injury despite the repeal of the 1982 Act. As is shown by the reproduction of s 22 as it appears in Vol 18 of the Reprinted Statutes as set out above, the reprint in 1986 substituted a reference to the 1982 Act. Counsel for the defendant submitted that as there had been no further reprint since 1986 there has not, so far, been an opportunity to update the reference to the 1992 Act. In any event, it was argued, such an updating is not strictly necessary due to the paramount status of s 14(1) of ARCIA which simply perpetuates the same paramount bar in the predecessor Statute. 
It was at this stage of the argument that s 20(b) of the Acts Interpretation Act set out earlier was invoked, the proposition being that: 
“the repeal of an enactment which makes a textural amendment to another enactment, without an express term to the contrary, merely indicates an intention to remove the machinery by which words have come to be inserted in another enactment, and is not intended to affect the continuance in force of the words added to that enactment ”
In support of that submission reference was made not only to s 20(b) [supra] but also 44(1) Halsbury's Laws of England (4th Ed reissue) at para 1313 and Laws of New Zealand, Statutes, para 84. In Laws of New Zealand the matter is stated substantially as it is in Halsbury's Laws of England and both commentaries support the defendant's submission. 
The contrary argument, as we shall see when I summarise the plaintiffs' submissions, is that there was no saving of the proviso to s 22 of CBA when the 1982 Act was repealed by ARCIA. But the defendant argues that there is no indication of an intention on the part of Parliament to depart from the basic principle of statutory interpretation set out in s 20(b) of the Acts Interpretation Act and further that such an interpretation (which could only be by implication) would be repugnant to Parliament's clear intention to retain an overall bar in respect of personal injury claims. 
The defendant also developed an argument based upon ss 18 and 21 of the Acts Interpretation Act [supra]. As can be seen s 18 carries references in earlier Acts forward to subsequent Acts unless it is otherwise manifested by the context. And so it was argued that in this case s 21 should be read as follows: 
In every unrepealed Act [in this case the CBA Act s.22] in which reference is made to any repealed Act [in this case the 1982 Accident Compensation Act] such reference will be construed as referring to any subsequent enactment [that is ARCIA] passed in substitution for such repealed Act, unless it is otherwise manifested by the context ”
The defendant also relies upon the way the matter is treated in the text Brookers Aviation Law in New Zealand, because there s 22 is reproduced with the reference in the proviso being to ARCIA. But again, as we shall see, the plaintiffs argue that ARCIA is not an enactment passed in substitution for either of the earlier Acts. The defendant's contention, however, is that ARCIA is such an enactment passed in substitution and for the general principle it relies upon Re: Eskay Metalware Limited Inc [1978] 2 NZLR 46, 49, where it was held that s 56 of the Insolvency Act 1967 had been passed in substitution for s 79 of the Bankruptcy Act 1908. It was stated by the Court of Appeal that a substitution enactment had to be one that was: 
‘to be put in the place, or stand in the stead, of the repealed provision’. It follows that the new enactment must be of the same character as its predecessor; It must have the same kind of function and the subject matter must be essentially the same without necessarily being identical in scope. But, provided the new provision is directed to the same end, there need not be precise correspondence in the manner of dealing with the subject matter. ”
That ARCIA is an enactment passed in substitution, the defendant contends, is demonstrated by the subsequent decision of the Court of Appeal in Childs v Hillock [supra] at pg 67 commencing at line 49 to 54 where Hardie-Boys J, delivering the judgment of the Court said: 
“The Act of 1992 is the third in a series (the Accident Compensation Acts of 1972 and 1982 are the others) designed to provide compensation for persons suffering personal injury without it being necessary for them to establish through the Courts common law liability based on fault. As a corollary to the right to compensation, the legislation has barred claims for compensatory damages in respect of personal injury for which statutory compensation is provided. ”
Having laid this foundation the defendant submitted that it is clear beyond sensible argument that ARCIA was passed in substitution as recognised by the Court of Appeal in Childs v Hillock [supra] and furthermore, it was submitted that s 135 of ARCIA supports that argument dealing as it does with transitional provisions and the relationship of the 1992 Act to the former Acts. 
Mr Gedye did not shrink from recognising that there are changes. Definitions have been refined and lump sums have been removed in favour of a greater emphasis upon rehabilitation and safety. The defendant's contentions on this limb of its argument were summarised at paragraph 5.19 of counsel's synopsis as follows: 
“5.19 Summary: 
It is clear that ARCIA was to stand in the stead of the 1982 Act It has the same function, the same subject matter and the same scope as the 1982 Act. It is directed at the same end as the 1982 Act. namely a non-fault compensation scheme which excludes other rights to compensation for those who come within its ambit. The fundamental bar against proceedings is unaltered in ARCIA both in substance and in form. This case is a classic example of exactly what s 21 of the Acts Interpretation Act was intended to cover. ”
The defendant's third proposition attacked the plaintiffs' contention that because of certain conditions of carriage printed on the airline tickets of the plaintiffs, they could take advantage of s 14(3) paragraph (b). The plaintiffs' argument in this regard also relies upon the contention that the proviso at the end of subsection (3) of s.14 of ARCIA applies only to sub-paragraph (c) of subsection (3) and not to subsections (a), (b) and (c). 
Not all the airline tickets were the same because they were acquired from different outlets. Three are described as self-write tickets, seven are said to have come from the IATA ticket stock, and four were described as Ansett Auto Tickets. All of them, however, referred to the carriage pursuant to the ticket being subject to the provisions of Part II of CBA and the Carriage of Goods Act 1979 and Amendments 
The defendant's preliminary argument is that these provisions are not terms of any contract between the parties but simply state the legal position as established by Part II of the Act. Shortly put, the point is that the provisions of the two Acts referred to would apply irrespective of whether the airline and its passengers agreed or not. 
The more fundamental argument, however, relates to the proviso at the end of subsection 3, as set out above, which reads: 
“But no compensation for personal injury covered by this Act or personal injury by accident covered by the Accident Compensation Act 1972 or the Accident Compensation Act 1982 shall be awarded in any such proceedings. ”
Mr Gedye cited Saxon v Kelvin & Flint [1997] 2 NZLR 72, a decision of Master Faire where a sharemilker employed by the defendants contracted Leptospirosis as a result of his employment and then claimed damages pursuant to his sharemilking agreement. The Master struck the claim out, holding that the prohibition against claims for compensation for personal injury at the end of s 14(3) applied to all of the three categories set out in paragraphs (a), (b) and (c) of s.14(3). At page 76 of the judgment the Master said, commencing at line 12 and onto page 77, line 5: 
“The issue raised in this case, however, is whether or not the legislature intended that there would be no bar to proceedings for damages arising directly or indirectly out of personal injury without restriction in at least two of the three circumstances referred to in subs (3) of s.14. If that interpretation is correct then the change made by the operation of s 14(3) is very wide and significant. It may well have had the effect of opening up claims for personal injury out of motor vehicle accidents where damage to property in the form of damage to motor vehicles has occurred The issue is whether the change in wording and format introduced by s 14(3) was intended by Parliament to have the wide consequences to which I have made reference 
I have reached the conclusion that that was not intended by Parliament and that the additional words, that is 
‘ … but no compensation for personal injury covered by this Act or personal injury by accident covered by the Accident Compensation Act 1972 or the Accident Compensation Act 1982 shall be awarded in any such proceedings ’
apply to each of (a), (b) and (c) of subs (3). My reasons are the following: 
(a)
the scheme of the Act is to provide compensation for personal injury by accident to all victims of accident who comply with the requirements of the Act. In exchange for such cover the right to sue is forfeited; 
(b)
grammatically subs (3) is set out in three separate parts, each of which ends with a semicolon. They are expressed as alternatives. What follows the semicolon, that is the completion of the sentence, logically applies to all three parts. It is only the way the part has been typeset that lends any support for the argument advanced by the plaintiff that the additional words are limited to s 14(3)(c) Such an argument runs contrary to what has been the clear and stated purpose of this legislation; 
(c)
there is nothing that signals any significant change in the policy of cover and liability in this area by the enactment of the 1992 Act; 
(d)
there is logic in allowing proceedings to recover damages in the three types of situation specified in subs (3)(a), (b), and (c) but at the same time excluding from such claims compensation for personal injury where the injury is covered by the Accident Rehabilitation and Compensation Insurance Act 1992; 
(e)
it seems to me that it would be completely illogical to allow both a claim for compensation pursuant to the Accident Rehabilitation and Compensation Act on the one hand and also permit a common law claim for damages in respect of the same injury. That, of course, is the consequence of the plaintiff's interpretation, 
(f)
if the subsection is construed as a whole, as it is it is one sentence, then the construction sought by the defendant is clearly the correct one. ”
In my view the Master's conclusion was undoubtedly right. His treatment of the prohibition against claims for personal injury is fully supported by the Court of Appeal case Re Bimler [1994] 12 FRNZ, 69, where in another statutory context the legislative history was examined and the fact that there had been a change in the way in which the proviso had been printed. At pg 74, Richardson J, as he then was, delivering the decision of the Court said: 
“It would be extraordinary if by the printing change of taking the proviso to the margin, Parliament is deemed to have made such a radical change and one so uncertain in its practical application. Inquiry from the Parliamentary Counsel confirms our impression that there appears to be no invariable usage in New Zealand legislative drafting as to the printing location of provisos. … A mere change in the layout of the provisions would have been an extraordinarily indirect way of making a change in meaning ”
Concluding his submissions Mr Gedye summarised the defendant's position as follows, in paragraphs 8.1 to 8.4: 
“8.1
The plaintiffs' claims for compensatory damages for personal injury and death are barred by s 14 ARCIA. This Section has paramount effect over any other enactment, including CBA
8.2
This position is confirmed by the proviso to s 22 CBA, which should be read as referring to ARCIA, not the 1982 Act: ss 18 and 21 Acts Interpretation Act 1924. 
8.3
The plaintiffs' claim is a proceeding under an enactment and is not a claim for damages for breach of an express term of any contract Therefore, the plaintiffs' claim does not fall within the exception to the statutory bar contained in s 14(3)(b) ARCIA. 
8.4
The proviso to s 14(3) ARCIA applies to prevent the plaintiffs claiming an award of compensation as claimed in the statement of claim ”
The submissions of Mr Corkill on behalf of the Accident Rehabilitation and Compensation Insurance Corporation were directed principally to whether or not s 14 bars the plaintiffs' claim and whether the proviso in s 14(3) applies to the plaintiffs' claim. Effectively Mr Corkill's submissions mirrored those of the defendant on these points. In one respect, however, counsel properly pointed out to the Court that there may be room for a common law claim for compensatory damages. Counsel first drew attention to the way in which the claim for personal injury is framed in paragraph 9 of the third amended statement of claim. That paragraph first records the names of the three passengers who were fatally injured as a result of the crash and then continues: 
“The other plaintiffs suffered severe injuries, details to be particularised prior to trial. ”
No further details are given. Mr Corkill covered the point in four succinct paragraphs, numbered 10, 11, 12 and 13 in his synopsis reading as follows: 
“10.
It is unclear from the pleading as to whether the ‘severe injuries’ involved physical injuries, in all cases. 
11.
Mental injuries per se (apart from the specific allowance for cover in respect of mental or nervous shock under Section 8(3), are not covered under the Act, and a common law claim for compensatory damages for mental injury, which is not the consequence of physical injury, can be brought. 
12.
The Corporation is obliged to point out if one or more Plaintiffs pleaded mental injury in the absence of physical injury, a claim for compensatory damages could be brought. 
13.
In summary to this point, therefore, the Plaintiffs in this case (subject to the ‘mental injuries’ exception just mentioned) fall squarely under the ARCI Act. One has to conclude that they have, in the words of Section 14(1) ‘suffered’ ‘personal injury covered by this Act’. ”
Mr Corkill also took the Court to the Court of Appeal decision in Donselaar v Donselaar [1982] 1 NZLR 97. In particular referring to the following passages: 
“Cooke J (as he then was), page 104/20-105/39: 
‘ … the “mischief” which the Accident Compensation Act set out to remedy must have been primarily the uneven and inadequate scope of common law negligence actions as a means of securing compensation for personal injury in modern society …  ’
Richardson J (as he then was): 
‘That theme of prevention of accidents, of rehabilitation of accident victims and of compensation for them and their dependants, is reflected in the detailed provisions of the legislation, particularly Part II relating to prevention and rehabilitation in Part VI relating to the compensation to be paid out of statutory funds ’
(page 108)
Somers J 
‘In the context of those stated objectives Section 5(1) can reasonably be read as intended to bar proceedings to recover that which the Act itself provides namely compensation — those damages commonly labelled as compensatory and which include aggravated compensatory damages … In short Section 5(1) is complimentary or correlative to the objects expressed in Section 4 — because compensation is provided no damages may be claimed. 
In the phrase “damages arising … out of the injury or death” the words “the injury” are referable to the defined words “personal injury by accident” which is “suffered”. The words “arising out of” are not a term of art in this context and are not wholly synonymous with any such terms as “resulting from”, “flowing from”, “caused by”, “occasioned by” or “in consequence of”. I consider the damages referred to are those suffered or sustained by a person injured, or recoverable as the result of his death, and which are direct or consequential upon the injury or death That is to say they are compensatory in character ’
(page 115)

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