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Safeguard OSH Solutions - Thomson Reuters

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OSH Tracker

Department of Labour v NZ Built Ltd (DC, 11/04/08)

Sentencing Tracker

Principal Offences:
Failure by principal to ensure no harm came to contractor/employee of contractor while doing work contractor engaged to do (ss 18(1)(b )and 50(1)(a) Health and Safety in Employment Act 1992)
Plea:
Guilty
Non-Custodial Sentences:
$40
000 fine plus Court costs of $130 and solicitors' fee of $250
Aggravating Factors:
Victim impact - serious injuries, on-going effects on victim
Mitigating Factors:
Restorative justice process
Reparation payment
Guilty plea
Co-operation with authorities
Lack of previous convictions
Remedial efforts
Victim:
Male

OSH Tracker

Defendant:
NZ Built Ltd
NZ BUILT LTD was fined $40,000 under s18(1)(a) and made a $25,000 offer of amends to a subcontractor’s employee who fell 3m from a partially completed deck. The defendant company was responsible for providing scaffolding for the site, and the subcontractor’s managing director had informed NZ Built’s project manager that it would be needed when the deck was done. The equipment was not supplied, however, and the injured man began work on the deck standing on lose planks. He suffered fractures to his spine and shoulder blade, a punctured lung and a deep head wound ( Auckland DC, April 11). 
Industry:
Construction
Sub-Industry:
General Construction
Risk:
Fall from height
Harm:
Injury
Penalty Amount:
$65000.00
Reparation Amount:
$25000.00
Appeared in Safeguard issue 112

Judgment Text

NOTES OF JUDGE FWM McELREA ON SENTENCING 
Judge FWM McElrea
The charge 
[1]
The defendant NZ Built Limited of Mt Wellington has pleaded Guilty to one charge under ss 18(1)(b) and 51A of the Health and Safety Employment Act 1992, which I will hereafter call “the Act”
[2]
The charge alleges that the company, being a principal, failed to take all practicable steps to ensure that a sub-contractor, namely Graham John Beazley, was not harmed while doing labouring work that the contractor was engaged to do. 
[3]
The charge was laid on 3 December 2007 and a Guilty plea entered at an early opportunity, namely on 15 February 2008. 
The facts 
[4]
The summary of facts shows that the defendant is an Auckland-based residential building company who were renovating an existing dwelling at 51 Tarawera Terrace St Heliers. 
[5]
Faulkner Construction Limited is a building company that employs three staff and two contractors. The defendant company engaged Faulkner Construction to supply labour and carry out carpentry work at the work site. Under the terms of the verbal contract between the two companies the defendant was to provide any scaffolding that was required for working at height. 
[6]
On 19 July 2007 Mr Graham Beazley, a contractor of Faulkner, fell while working on the deck at the work site. He fell 3.15 metres onto timber framed steps. As a result of the fall he suffered a fractured shoulder blade, a fracture to his spine, a punctured lung and a bone deep laceration to his forehead. 
[7]
On 22 June 2007, prior to the commencement of work at the work site, Mr Faulkner of Faulkner Construction met with the defendant's project manager Mr de Bruin and identified the deck area at the rear of the dwelling as being a potential “fall from height” area. Mr de Bruin stated that he would organise scaffolding when it was required for work to be carried out on the deck. It is from this deck area that Mr Beazley ultimately fell. 
[8]
There are other dates given in the summary of facts which I do not need to go into. What is pertinent is that on 18 July 2007, the day before the accident, and after Mr Beazley had begun work on the rear deck from which he fell, Mr de Bruin visited the work site while work continued. In my view, the only inference to be drawn from that is that he would have seen that Mr Beazley was working in that area without the scaffolding being in place. 
[9]
Mr Beazley met Mr de Bruin, showed him his work on the deck and Mr de Bruin commented that they needed to push on with the job. At that stage fall protection had not been provided and as I say this would have been obvious to Mr de Bruin. 
[10]
The informant's investigation of the accident revealed that there was a breach of the obligation under s 181(b) of the Act to take all practicable steps to ensure that its sub-contractor was not harmed while doing work that Faulkner Construction, the sub-contractor, was engaged to do. 
[11]
The defendant is said to have failed to take the following practicable steps, although I have my doubts about the first one: 
i)
The identification of the hazard, as being a fall from the deck. That in fact, was identified and I do not regard that as part of the failure in this case. It was an identified hazard; 
ii)
Secondly, failure to provide suitable means to prevent a fall from, or through the deck, such as scaffolding. That is certainly true' 
iii)
Thirdly, failing to ensure that no work was carried out until suitable and sufficient means were provided to prevent the risk of a fall. 
Those last two particulars are those upon which I proceed. 
[12]
The defendant company has not previously appeared in Court and has no previous convictions. 
Impact on victim 
[13]
The victim impact statement provided in this case shows that there were serious, indeed in my view very serious injuries suffered by the victim. I read from the heading “Physical Injuries”
“I suffered a compressed fracture at the L1 level of my spine, a fractured right shoulder blade, a punctured lung and a bone deep laceration to my forehead. The laceration to my head has fully healed, however my internal injuries have been slow to heal and I have lost much of my former fit and able state. ”
[I interpolate to add that this statement is dated only two weeks ago, namely on 28 March 2008]. 
“Formerly, I worked four days a week doing carpentry work on building sites. After my fall of over three metres, I was in Auckland Hospital for four days. I was in significant pain for about two weeks after the accident. I was on painkillers that affected my bladder and bowels. That was the worst part of it. I had to go off the prescribed painkillers. 
My body is still sore with muscular pain. I am currently on a twelve-week fitness programme provided by ACC to try and restore my level of fitness. At present I am still very sore most of the time, with pain my back from centre to lower, also stiffness in both legs. Some nights I have trouble sleeping so on those nights it is the TV that had the workout. I do not feel that I will ever get back to the level of fitness that I had before the accident. ”
[14]
In summary, this person has suffered serious injury only, some of which has healed. He is still suffering disability and pain and is concerned that he will never get back to his previous level of fitness. 
[15]
The emotional harm suffered relates to stress, due to his tight financial situation and anxiety about when he will be able to reach a state of physical health so that he can start working again. 
[16]
He says “I am not one to bear grudges and have no axe to grind, but it does aggravate me to think back when I was working on the 51 Tarawera Terrace work site, when I asked about scaffolding for the job, it was always coming, but it never arrived”
[17]
The effects on the victim in my view are serious and ongoing. 
Restorative justice 
[18]
Next, I refer to the fact that there has been a restorative justice process followed in this case and I give the parties considerable credit for that. The Court has been provided with a report from a recognised provider group, PACT Restorative Justice Services, which identifies for the Court the processes followed both before and during the conference held on Friday 28 March from 10.05 am until 11.15 am at the facilitator's office in Mt Eden. That was attended by offender, victim and support persons on each side together with other attendees, mostly as non-participants, such as a representative of the Department of Labour. 
[19]
The report of the conference shows that it served several purposes. It enabled the defendant to express a remorse for what had happened and concern for the victim. It enabled an apology to be made in a fulsome manner. It enabled explanations to be given and discussed. It enabled the defendant's needs to be discussed and in particular the sort of figure that the parties might regard as appropriate for reparation. That figure is one of $25,000 payable as a lump sum in respect of the victim's losses and his ongoing costs, pain and suffering. The apology was accepted as being genuine. The facilitator's costs will also be met and I assume they might be $1,000 or $1,500. The parties did not express any view upon penalty and I am not suggesting that they should have. 
[20]
I take into account, as required by s 8 of the Act, the fact that process has been followed and the content of the report. It is extremely helpful to the Court in identifying what appears to the parties to be an appropriate reparation figure, quite apart from serving the purposes of assisting the victim by receipt of an apology and expressions of remorse. 
Prosecution submissions 
[21]
The prosecutions submissions advanced by Ms Hopkins start by referring to the preventative purposes of the Act In Central Cranes Limited v Department of Labour [1997] 3 NZLR 694Has Cases Citing which are not known to be negative[Green]  the Court of Appeal said at page 701: 
“It is clear that the Act adopts a preventative approach to maintaining and promoting health and safety in the workplace. Its principal object is to provide for the prevention of harm. To achieve this object employers are required to promote safety in the workplace and both employers and others associated with the workplace are subject to the duty to take all practicable steps to ensure such safety or ensure that employees and others in the workplace are not harmed. ”
[22]
I accept that an important object of the Act is to promote safety in the workplace and that in achieving this it is important that employers and others take all practicable steps to ensure that employees and contractors are not harmed. 
[23]
Ms Hopkins refers next to the amendment to the Act in 2003 which increased the level of penalties five-fold from $50,000 to $250,000. I pause to note that in other areas, for example resource management, the High Court has noted that such a level of increase is obviously intended by the legislature to result in significant increase in fines, as part of the deterrent aspect of sentencing. 
[24]
The second change made at that time was to introduce specific sentencing criteria that are set out in s 51A of the Act. These operate alongside the provisions of the Sentencing Act 2002. 
[25]
Ms Hopkins then suggests that sentencing under this Act requires the application of a two-step approach enunciated by Priestley J in Department of Labour v Areva T & D New Zealand Limited (unreported, 9 November 2005, High Court Rotorua, CRI 2005-463-042)
“If having regard to the relevant criteria, the court imposes a reparation sentence, then obviously, as a next step, whether or not to impose a fine and if so the quantum of the fine, must be considered in the light of all the Sentencing Act criteria and in particular the totality principle and the overall appropriateness of sentences and orders imposed. ”
[26]
I accept the submission that determining the amount of a fine must be, at least initially, a separate and discrete exercise to that undertaken in dealing with reparation. 
[27]
I propose therefore to start with reparation and I can come immediately to the conclusion that I have no difficulty with the figure of $25,000 discussed and agreed by the parties and indeed subsequently paid. That seems to me to be an appropriate figure in the light of the facts relating to the victim known to the Court and although no reparation order is needed, because the payment has been made on a voluntary basis, I take into account that payment as I proceed. 
[28]
Turning to the question of a fine: Ms Hopkins quotes from Harrison J in Police v Ferrier (unreported, 18 November 2003, Auckland High Court, CRI 2003-404-195 at para 15): 
“A fine is essentially punitive; it is a pecuniary penalty imposed by and for the state. By contrast, an order for reparation is compensatory in nature, designed to recompense an individual or her family for financial loss or emotional harm suffered as a result of another's offending (s 32(1)). The two are conceptually different and serve disparate purposes. ”
[29]
As to the level of an appropriate fine, counsel, of course, properly take me to ss 7 and 8 of the Sentencing Act and the purposes of sentencing. I agree that the following are relevant in this context: 
i)
The holding of the offender accountable for harm done; 
ii)
Promoting a sense of responsibility for that harm and acknowledgement of it; 
iii)
Denouncing the conduct in which the offender was involved and deterring others from committing the same or similar offences. 
[30]
I agree with the defence that this defendant is unlikely to need any further deterrence of a personal type because its experience in this case will have been a salutatory lesson. 
[31]
Other purposes of sentencing relating to the victim's position and the provision of reparation are also relevant. 
[32]
In terms of s 8 and the principles there set out, the informant submits that the following are particularly relevant: first of all, the gravity of the offending including the degree of culpability; the seriousness of the offence and the effect of the offending on the victim. In terms of gravity, the prosecution position is that the culpability level in this case sits in the high range because the hazard was obvious. It could easily have been controlled and what was done was not within industry standards. 
[33]
It is also pointed out, and I think with merit, that not only was this man injured but also others were exposed to risk because there were other people working at that level without the protection of scaffolding. 
[34]
In my view, it is also relevant in assessing culpability that Mr de Bruin had been on the site the day before and seen one or more persons working there without scaffolding and still allowed the situation to continue. His explanation for that is provided by way of an affidavit supplemented at his counsel's request, by some oral evidence in Court today, although unsworn. That explanation is in terms of some other person failing to tell him when this particular part of the site was ready to receive scaffolding. I do not give much weight to that, because in my view, he was there to see for himself and the fact that he wishes to blame somebody else is not very much to his credit. 
[35]
In any event, I consider that it is the company that is the defendant and for all employees of the company and those working for it, their conduct is relevant and is attributed to the company; whether the fault lay with Mr de Bruin or somebody else, or a combination, is beside the point. 
[36]
It is acknowledged that there was what Ms Hudson calls “human error” but she likewise acknowledges that just about every accident that ever occurs can be attributed to that and the fact of the matter is that what needed to be done was known but not done. 
[37]
In terms of harm, Ms Hopkins submits that the level of harm suffered was serious. I would put it higher than that and say it was very serious, particularly having regard to the ongoing effects for the victim. 
[38]
Putting all those matters together, it is the submission of the prosecution that this was grave offending. Ms Hopkins then emphasises the need for deterrence and denunciation, emphasises again the increase in the maximum penalty level and submits that a starting in the range of $125,000 to $150,000 - that is, somewhere around 50% to 60% of the maximum - is appropriate in this case. 
[39]
Ms Hopkins refers to the de Spa case where the High Court observed that had the fine been one of $20,000 it could not have been challenged as too high and she points out that that would have been 40% of the maximum penalty available at that time. 
[40]
Giving credit for mitigating aspects of a Guilty plea, co-operation with the Department during the investigation, lack of previous convictions and accepting that there are no aggravating features, counsel comes ultimately to a submission that a total fine in the range of $60,000 to $75,000 is called for, in addition to the reparation already paid. 
Effect of insurance 
[41]
Ms Hopkins submits that the fact that the defendant is insured for the reparation should not go to reduce the amount of any fine, otherwise this would be operating in contravention of the intention of the Act which states in s 56(i) that fines cannot be covered by way of insurance. In other words, if the Court were to fix an appropriate fine and then deduct the amount of any reparation knowing that that is covered by insurance, it would in effect be allowing part of an appropriate fine to be paid by the insurer contrary to the object of the Act. 
[42]
While I accept the drift of that submission I see the matter slightly differently. In my view, the Court should fix an appropriate reparation figure, and for the reasons given by Ms Hudson in her submissions which I will come to in a moment, reparation should be the first concern of the Court. It is not in itself punishment but it is part of the sentencing process. 
[43]
Having done that, the Court must then go on to decide what figure, if any, should be imposed by way of fine and I accept that clearly, the object of the Act and the importance of deterrence requires a fine in virtually every case that one can think of. The amount of that fine is not to be reduced simply because reparation has been paid. In my view, the relevance of the insurance is that there can be no argument that the defendant does not have the means to pay that. 
[44]
Financial means arise by virtue of s 40 of the Sentencing Act. The Court must take those into account, whether they have the effect of increasing or reducing the amount of an appropriate fine. My conclusion is that there is no reason to reduce the overall sentence because of an inability to pay the amount of reparation that is already covered by insurance. Nor should the total penalty be increased simply because the defendant has a separate means of funding that element of the sentence, namely the reparation. 
Defence submissions 
[45]
I turn now to the defence submissions which come at this from a very different point of view. These are summarised by Ms Hudson at the outset as showing: 
(i)
the defendant has a good safety record; 
(ii)
it is a responsible and safety-conscious company and it has expressed its sincere regret and compensated the victim in the sum of $25,000 with his agreement; 
(iii)
appropriate remedial steps were taken immediately to deal with the risk on this site and to prevent further such risks arising in the future; 
(iv)
there was an early Guilty plea and full co-operation with the Department of Labour throughout its investigation; 
(v)
the company's financial position is such that it would be appropriate for any fine to be paid in instalments. 
Financial position 
[46]
The last submission would suggest that the company is not in a good financial position. The defendant has supplied a balance sheet for the year ended 29 February 2008. It is therefore right up-to-date. This does show a relatively small profit, $16,161, said to be due to difficult trading circumstances during that year, but I note that the company's asset position is strong. It has a total equity of $207,131, of which all but $100 is retained earnings, which have been lent out to various parties, including for example a related entity, the Belcher Family Trust, which has received loans totalling $105,125. In all, the company has about $267,000 in assets in the form of loans to various parties which as far as the Court is concerned it can call up to pay any appropriate fine. 
[47]
The company is therefore in my view in a reasonably strong financial position to meet an appropriate penalty. It is not in the “very large corporate offender” category, which might justify an increase in penalty as occurred when this Court sentenced Fletcher Construction and Leighton Construction last year on a Health and Safety in Employment Act matter. 
[48]
Against that general background Ms Hudson helpfully approaches the matter via the sentencing framework provided since 2003 in s 51A. The headings that she uses are the following headings obtained from that section: 
Objectives of the Act 
[49]
These are agreed to include eliminating or minimising workplace hazards and promoting workplace safety. 
Degree of culpability 
[50]
This is submitted to be low, having regard to the fact that the company had identified the risk and made arrangements for scaffolding to be there and instructed a contractor, Mr Ong to call Mr de Bruin I gather, so that he could arrange for the scaffolding to be moved to this location. 
[51]
All of that however, in my view, flies in the face of the fact that Mr de Bruin was onsite and saw the work being done without the scaffolding in place. The answer may lie in the fact that came out in Court today, that work was being done both on the deck above and on the deck below. The fact that it was contemporaneous work on the deck below appears to have meant that the scaffolding could not be put in place. The short answer to that however, is that work could have stopped below or above. One or the other should have happened until this was done. I do not accept the submission that this was low culpability. I see it as in the moderately high region. 
Degree of harm 
[52]
The company acknowledges that the victim suffered serious injury. 
Attitude of the defendant in terms of remorse, co-operation, remedial or restorative action taken and any offer to make amends 
[53]
Under this heading the defendant does deserve full credit, in my view, for both remorse expressed; remedial action taken as set out in the submissions; co-operation with the Department which is not in dispute; and the offer to make amends which was done through the restorative justice process and the defendant gets full credit for that. 
Financial circumstances of the offender 
[54]
I have already dealt with that. 
A Guilty plea 
[55]
That is acknowledged. 
Previous record of the offender 
[56]
Ms Hudson points out that the company has not previously had a serious accident on any of its work sites over the 11 years of existence during which it has completed over 200 housing projects. That evidence comes from Mr Belcher and is evidence, in my view, of a good record and I do not think it is detracted from by Ms Hopkins' advice that there have been, nevertheless, some notifications to the Department in respect of other matters. That is as maybe: the fact is that there have been no serious accidents and there have been no convictions, nor I gather even prosecutions in Court. 
The need to impose deterrent penalties 
[57]
This is something which the Act puts at the forefront for the Court in the same way as case law has in the resource management area. Deterrence here, in my view, refers more appropriately to general deterrence rather than the need for specific deterrence for this defendant. But however good its position, there is a need for meaningful fines that are something more than a license fee and have a deterrent effect in the industry. 
Amount of reparation ordered 
[58]
The Court is required to take that into account and I do and I consider that as a reasonably large figure by recent standards but one that is entirely appropriate in the light of the discussions between the parties. 
Previous authorities 
[59]
Both counsel have referred me to other decisions and sought to rely on different propositions that may be found in them. Ms Hopkins made the submission that the principles of sentencing in s 8 of the Sentencing Act provide as a principle of sentencing that the most serious cases should receive the maximum penalty and cases that are close to the most serious should receive a penalty close to the maximum. Her submission is that there should therefore be a similar but proportionate increase in penalties for lower levels of offending. She submits that what the Court of Appeal did in respect of cases of grievous bodily harm in R v Taueki (where a tariff was calculated covering the full range of penalties available and applying it to the full range of culpability or seriousness available) — that such an approach ought to be taken in this case. 
[60]
As a matter of theory or principle I agree that is indicated as an intention of Parliament and I have decided to approach the matter with that as one of the principles in mind. 
[61]
On the other hand, Ms Hudson points to a number of cases with low levels of fine, although some of these are currently under appeal. They are Department of Labour v Don Grey Engineering Limited and secondly Department of Labour v Cookie Time Limited, both of those being decisions from the Christchurch District Court given on 21 January 2008. The reference is on the front page of the defence casebook. 
Consistency 
[62]
Ms Hudson also drew attention to a table, giving the average level of fines in health and safety prosecutions, before and after the maximum fine was increased five-fold. That table shows that prior to 5 May 2003 the average fine for the four preceding years was $7,272 and after that date, the average fine in the next four years was only a little higher at $8,638. On the other hand, reparation went up from the average $1,002 to an average of $10,268. This, however, may have more to do with the greater emphasis in the Courts on reparation and of the paramount position of victims' interests. 
[63]
It was submitted by Ms Hudson that the Court is required out of a sense of consistency with other cases to impose fines reflecting what has been done by other Judges since the changes made in 2003. That submission is based on s 8(e) of the Sentencing Act, which provides that in sentencing an offender the Court “must take into account the general desirability of consistency with appropriate sentencing levels and other means of dealing with offenders in respect of similar offenders committing similar offences in similar circumstances”
[64]
I pause to emphasise first of all the words “general desirability”. It is not stated as a fixed rule and in my view it is a mistake to see consistency with other cases as the ultimate benchmark of sentencing. 
[65]
The second point to be made is that s 8(e) is one of several principles, all of which must be taken into account by the Court. In my view, if the Court applying all the other principles comes to a view that a fine significantly different to what has been imposed in the past is called for then, in my view, while taking account of previous sentences, the Court should not regard itself as bound by them. Instead, the Court should endeavour to give effect to the intent of Parliament, in the Sentencing Act. 
[66]
Having said that, and referring to the table provided by Ms Hudson, my comment is that if that is a correct summary then the Courts have failed miserably to have regard to Parliament's intention expressed through the substantial increase in level of penalty in 2003, and the position calls for review at a high level. 
[67]
However, I say further that I do not accept that the basic position adopted by Ms Hudson in terms of a suitable starting point is correct. She bases her starting point of $25,000 to $30,000 primarily on the starting point of $25,000 adopted on appeal by Gendall J in Department of Labour v Fletcher Concrete and Infrastructure Limited ((2007) 8 NZELC 99, 001) where it was held that starting points of $12,000 or $15,000 in the Court below were manifestly inadequate. The Court held that $25,000 was a more appropriate starting point in the light of the legislative increase to the maximum fines under the Act. 
[68]
What I wish to stress at the moment is that that case was not as serious as this — indeed, it was considerably less serious. What happened there was that an employee was driving a truck to the face of a quarry and the ground beneath the rear wheels began to sink and give way. The truck tipped down the face of the quarry upside down but the driver managed to leap from the cab, avoiding permanent injury. 
[69]
As Ms Hopkins points out, the fine in fact imposed on appeal in the High Court was the one sought in the District Court by the Department of Labour. Another aspect that needs to be noted is the extent of the injuries as shown from para 2 of the report. The victim suffered some grazing to the limbs, lacerations about the head, pain [in] the ribs and shoulder and was admitted to Whangarei Hospital for one night and was unable to work for three weeks, later returning to full duties and eventually sustaining no permanent injury. That was a much lower level of injury than applied in this case and I do not read that case as suggesting the relatively high level of culpability that I believe applies in this case. It was found to be in the medium range, rather than in the high or very high range. 
[70]
I therefore treat that as a much less serious case. I also note that it was an informant's appeal and of course in such cases, one of the principles followed is that the fine imposed on appeal will be towards the lower end of what may have been appropriate at first instance. 
Overall assessment 
[71]
Having regard to that comparison, but also having regard to the matters set out in s 51(e) and in s 7 and 8 of the Sentencing Act, my view of this matter is that the level of culpability was moderately high having regard to the factors given already. The level of injury was very serious. The personal factors relating to the defendant's response are very favourable and they come in to the sentencing mix. I do not see the matter as being overall in the “grave offending” category, but nevertheless I see it as being in the upper range of seriousness. 
[72]
I take a starting point of $80,000 by way of fine. I believe the defendant is entitled to a discount of around one-third for its Guilty plea, its previous good record and its co-operation and remedial steps. 
[73]
I propose to allow a further discount in relation to attending a restorative justice conference and taking part in that in the manner previously outlined, and in the paying of reparation, albeit from an insurance source. 
[74]
The total discount that I allow from that starting point is therefore one of 50% and I conclude that a fine of $40,000 is appropriate in this case and that there is no reason to reduce that by reason of the defendant's inability to pay. 
[75]
No reparation order is required but having regard to the reparation already paid and the other mitigating factors, I now convict and sentence the defendant company to pay a fine of $40,000. There will also be Court costs of $130 and solicitors fee of $250. 
[76]
That outcome is nowhere near as high as sought by the prosecution where a figure of $60,000 to $75,000 was sought by way of fine but it is substantially above the figure of $4,000 to $6,000 calculated by Ms Hudson after taking her starting point and allowing 80% discounts, which, in my view, would be excessive anyway. The result is a figure not in the middle of theirs but one that in my view reflects all the factors the Court has to take into account in sentencing. 
[77]
That is the sentence of the Court. 

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