Youbert Yohana v Barclay Benson Lawyers

Supreme Court of NSW|2012-02-27|Before: Schmidt J

Judgment 1HER HONOUR : Two costs assessments have taken place involving both parties. The plaintiff is a former solicitor and the defendant was a client. The issues to be decided are firstly, whether an extension of time should be granted to file Notices of Appeal; and secondly, whether leave should be given under s 208M of the Legal Profession Act 1987 ("the 1987 Act"). 2By amended summonses filed 9 May 2011, the plaintiff seeks orders, firstly, nunc pro tunc pursuant to Rule 50.3(1)(c) of the Uniform Civil Procedure Rules 2005 ("UCPR") that the time for filing the summonses commencing the appeals be extended to 31 January 2011; secondly, leave to appeal from the whole of the decisions below; thirdly, the appeals be allowed; fourthly, the costs assessments of Robert George Webley and Richard Taperell dated 13 April 2010 and 18 June 2010 respectively, be set aside; fifthly, order that the underlying disputes referred to be referred to a judge for determination; sixthly, order that applications for assessments be referred to a new assessor; and seventhly, alternatively, an order that the applications for assessments be stayed. 3On 2 June 2011 Schmidt J ordered that the leave questions be determined separately. Therefore, this judgment only deals with the orders in paragraph [1] and [2] of the amended summonses that is that leave be granted to appeal.

Proceedings 2011/ 30933 (the first bill of costs) 10On 8 October 2009 a bill of costs dated 7 October 2009 in the amount of $35,956.55 was served on Mr Youbert. 11On 18 November 2009, Barclay Benson Solicitors applied to have the first bill of costs assessed under the 1987 Act and the Legal Profession Act 2004 ("the 2004 Act") "to the extent it applies" in respect of work carried out for Youbert Yohana. This bill of costs related to "work done of, and incidental a breach of contract, non payment of creditors of the Bridal Factory, premiums to QBE workers compensation, breach of lease in rent and outgoing payments by Arabella Lazar". 12The first bill of costs was referred to Richard Taperell, costs assessor for assessment. On 13 January 2010, Mr Taperell wrote to both parties solicitors (Ex 4) stating that objections should be served by 4.00 pm on 4 February and responses to be served by 4.00 pm on 18 February 2010 and should the documents not be received by the time and date specified the assessment would proceed in their absence. 13On 20 January 2010, the solicitor for Mr Yohana's wrote to the costs assessor relevantly stating: "As you will have observed from the Application a considerable amount of time has elapsed since the work alleged to be done was undertaken and no costs agreements were provided. I required access to the Costs Applicants documentation in order to provide a more particularised objection and have written to request access as well as attaching a copy of this letter." 14The costs assessor gave the solicitor for Mr Yohana an extension of time to serve his objections. Mr Yohana lodged his response with the costs assessor. They were:

The Costs Respondent objects to the referral of this matter to a costs assessor.
The Costs Respondent claims a substantial portion of the sums claimed in the bill of costs are in breach of the Statute of Limitations in that the work claimed being the subject of the claim is in excess of six years old.
At no time did the Costs Applicant provide a Costs Agreement to the Costs Respondent.
The Costs Respondent states he and Mr Henrick Isaac are related and at the time the alleged work was undertaken Mr Isaac stated the work would not be charged because of the family relationship and the business dealings in which the parties were then involved.
The fact that no costs agreement was provided and no action has been taken to claim payment for work most of which is over six years old would the Costs Respondents understanding of the basis of any work done by the Costs Applicant.
The Costs Respondent is at a disadvantage in having to respond to a claim for work alleged to be done over six years ago.
The Background and Outline is drafted in a confusing manner and it is difficult to assess the complexity of the matters alleged to be undertaken by the Costs Applicant.
The particulars of the application reveal very little correspondence from the Costs Applicant to the Costs Respondent and what there was has now been lost with the passing of time.
The Costs Respondent has no clear recollection of the work alleged to be undertaken.
The Costs Respondent therefore requires the Costs Applicant to make his files available for inspection and requests the original files be released or copies be provided and he be given sufficient time to inspect and respond before he can respond to the claims made by the Costs Applicant. 15On 18 June 2010, Costs Assessor, Richard Taperell gave reasons for determination. They are of short compass and read: "6. I have considered all the matters referred to in the Application for Assessment, the Bill, the Objections and the letters to me from the Applicant's solicitor.
In my view (a) It is irrelevant that six years has elapsed since most of the work was performed: there is no limitation period for an application for assessment; it cannot be said that assessment after six years is futile as the Applicant's cause of action is statute barred because on filing the Certificate of Determination of Costs with the Local Court the Applicant can obtain judgment in the amount of the Certificate and the Court fees; (b) I accept that there was a costs agreement: the Applicant gave the Respondent a fee disclosure in the form of an offer to enter into a costs agreement and the Respondent accepted the offer by continuing to instruct the Applicant; (c) The Applicant denies that he agreed to carry out the work without charge; his relationship with the Respondent was not close, the work performed involved protection of the Respondent's business interests, was substantial, involved complex Supreme Court litigation and is most unlikely to have been undertaken gratuitously. 8 The Respondent does not dispute that any of the work described in the Bill was carried out, or that it was not performed in a reasonable manner.
The amount claimed is calculated in accordance with the provisions of the costs agreement and in any event the basis of charging is reasonable.
The Bill should be confirmed." 16On 12 July 2010, the costs assessor assessed that a fair and reasonable amount to be paid by Mr Yohana to Barclay Benson Solicitors was the sum of $36,316.12 and issued a certificate of assessment to that effect.

Proceedings 2011/30956 (the second bill of costs) 17On 16 October 2009 a second bill of costs dated 15 October 2009 in the amount of $27,982.63 was served on Mr Youbert. 18On 19 November 2009, an application for assessment was made to have the second bill of costs assessed under the 1987 Act and the 2004 Act "to the extent it applies" in respect of work carried out for Mr Yohana . The bill of costs related to "work done on instructions received from Youbert Yohana in relation to District Court Proceedings...and Local Court (Civil Claims)". 19The costs assessment was referred to Robert George Webley, costs assessor. Mr Yohana did not file a response or a notice of objections. 20On 13 April 2010, the costs assessor provided his reasons. They are as follows: "2. The Costs have been referred to me for assessment following the filing of an application on or 19 th November 2009 and referred to me by letter dated 21 st December 2009. 3. The costs concerned are Practitioner and Client costs within the terms of the Legal Profession Act 1987. The instructions were first received before 1 st of October 2005. 4. The costs concerned at Practitioner and Client costs which fall to be determined under Part 11 Division 6 of the Legal Profession Act 1987. The relevant criteria for Assessment include those matters set out in Section 208A - B of the Act. 5. In response to my query as to whether there was a Costs Agreement I have received a document purporting to be a Costs Agreement between the Solicitor and Client that applies to this work. Unfortunately that document is undated and, even with the aid of the Solicitor's file, I am unable to satisfy myself when the Agreement was sent. It is not submitted that it is signed. On the face of it , it related to pursuit of Mr Lazar for breach of Contract, for non payment of Creditors of Bridal Factory, premiums to QBE Workers Compensation, breach of Lease in rent and outgoing payments. In the circumstances I am unable to apply that Costs Agreement I am entitled to proceed with the Assessment notwithstanding Section 208C of the Act. 6. Taking into account those matter that I must consider under Section 208A and those that I may consider under Section 208B I have determined that the rates should be allowed at the equivalent of $300.00 per hour plus GST for the Principal. I have disallowed costs for sending and receiving faxes and my other determinations are set out below. Paralegal fees have been reduced by 20%. I note that the work was carried out over the period from mid 2002 until September 2004. 7. Except where specifically referred to I have found that the work claimed are fair and reasonable within the terms of the Act taking into account the criteria referred to above. For brevity I have not listed every item, except to the extent that they were varied or disallowed and all of the other items have been reduced by 20% (e.g. reduction from $375.00 per hour to $300.00 per hour equivalent)." 21On 13 April 2010, the costs assessor assessed a fair and reasonable amount of costs to be paid to Barclay Benson Solicitors was $21,689.05 and issued a certificate of determination to that effect. 22In both assessments Mr Isaac successfully recovered his costs but in each assessment the costs assessor took a different approach. Costs Assessor Taperell upheld the costs agreement. Costs Assessor Webley did not. This in part can be explained by the different work carried out in each bill and perhaps by the lack of response by Mr Youbert in the assessment process before Costs Assessor Webley.

Court proceedings after certificates were issued 23On 20 September 2010, the certificate in relation to the first bill of costs was registered. On 20 September 2010, judgment was entered that Youbert Yohana pay to Barclay Benson Solicitors the sum of $36,316.12. On 11 October 2010, the certificate in relation to the second bill of costs was registered. On 11 October 2010, judgment was entered that Youbert Yohana pay to Barclay Benson Solicitors the sum of $21,845.05. On 25 October 2010, a bankruptcy notice was issued by Barclay Benson Solicitors . 24By notices of motion filed 12 November 2010, in the costs assessment files, Mr Yohana sought that the judgments and orders made against him be set aside. On 10 December 2010, Latham J dismissed the notices of motion and ordered Mr Yohana to pay the costs. Her Honour directed Mr Yohana to file summonses and serve affidavits on or before 31 January 2011, seeking leave under UCPR 50.3 and s 2008 of the 1987 Act. Her Honour also ordered that pursuant to UCPR 36.17, that the plaintiff's name on the judgment entered on 11 October 2010 should be changed from Barclay Benson Solicitors to Barclay Benson Lawyers. 25On 31 January 2011, two summonses were filed in accordance with the direction of Latham J. 26On 9 May 2011, two amended summonses (as outlined earlier in this judgment) were filed. 27By motions filed 1 April 2011 Mr Yohana sought orders that the leave questions be determined separately to and in advance of any substantive appeals. On 2 June 2011, Schmidt J made those orders.

Explanation for delay in commencing the appeals 28UCPR 50.3 reads: 50.3 Time for appeal (1) A summons commencing an appeal must be filed: (a) within 28 days after the material date, or (b) if the appeal relates to the decision of a judicial officer, within such further time as the judicial officer may allow so long as the application for such further time is filed within 28 days after the material date, or (c) within such further time as the higher court may allow. (2) An application for an extension of time under subrule (1) (c) must be included in the summons commencing the appeal. 29The summonses seeking leave to appeal of the costs assessors' decisions should have been filed by 18 July 2010. Nothing was done until 12 November 2010, almost four months out of time. On 31 January 2011, the summonses seeking to set aside the costs assessors' decision were filed. 30Both Mr Yohana and Mr Isaac relied on their own affidavits. Neither deponent was cross examined. Mr Yohana's explanation for the delay is that at no time did he receive any communication alerting him to the existence of the Certificates of Determination nor the costs assessors' reasons nor the judgments until after he received a bankruptcy notice issued by Barclay Benson Solicitors on 25 October 2010. After he received the bankruptcy notice he says he instructed his present solicitors, David Legal, to carry out a search of the court files in the matters and they obtained copies of the Taperell Certificate, the judgment and the amended judgment. Shortly after those documents were obtained, Mr Yohana's solicitors showed him the copies of the "Taperell Certificate", judgment and the amended judgment. Until then he says he had never seen the Taperell Certificate or the judgment. On 25 November 2010, Mr Yohana says that he saw an affidavit sworn by Henrick Isaac in proceedings 2010/237866 and that this was the first time he saw a copy of the "Taperell Notice". It is not clear what documents, if any, he instructed his solicitors to obtain in relation to the "Webley Certificate". 31The reason Mr Yohana proffers for not taking any steps to review or set aside the determination within time was because he had not become aware of the determination until after he received a bankruptcy notice and following searches discovered the certificate of determination. Mr Yohana's current solicitors are David Legal. 32This explanation does not explain the following facts. It is not in dispute that both bills of costs were served on Mr Yohana. Nor is it in dispute that Mr Yohana was represented by Collins Legal and took part in the costs assessment process in relation to the first bill of costs that was assessed by Mr Taperell. So far as the Taperell Certificate is concerned, the costs assessor's letters [annexed to Mr Isaacs affidavit] show that the costs assessor wrote to the solicitors for both parties' solicitors advising them of each step of the process. 33On 18 June 2010, costs assessor Taperell forwarded a copy of his certificate of assessment together with his statement of reasons to Collins Legal the solicitors acting for Mr Yohana. Mr Yohana has not explained as to how it came to be that he was unaware of the existence of all of these documents. Mr Yohana was also aware of the existence of the second bill of costs as it was served upon him. He should have also been aware that the second bill of costs had been referred for assessment and that Mr Webley had been appointed as costs assessor. There is a letter by Barclay Benson Solicitors dated 22 March 2010 addressed to cost assessor Webley that indicates a copy of it was forwarded to Collins Legal. 34It is my view that Mr Yohana was certainly aware of the costs assessment process in relation to the first bill of costs and that an assessment had been made which was unfavourable to him. He was also aware that a cost assessment in relation to the second bill of costs was being undertaken. It is my view that Mr Yohana chose to ignore the result of the "Taperell" assessment and chose to ignore that the Webley assessment was taking place. Mr Yohana was spurred into action to challenge the assessments when a bankruptcy notice was served upon him. This is not, in my view, an acceptable explanation for delay. Hence, the applications for an extension of time to file the applications are refused. 35If I am wrong, I will consider whether leave should be given to appeal.

Leave to appeal and appeal 36Section 208M of the 1987 Act reads: "Appeal against decision of costs assessor by leave (1) A party to an application relating to a bill of costs may, in accordance with the rules of the Supreme Court, seek leave of the court to appeal to the court against the determination of the application made by a costs assessor. (2) A party to an application relating to costs payable as a result of an order made by a court or a tribunal may, in accordance with the rules of the court or tribunal, seek leave of the court or tribunal to appeal to the court or tribunal against the determination of the application made by a costs assessor. (3) The Supreme Court or court or tribunal may, in accordance with its rules, grant leave to appeal and may hear and determine the appeal. (4) An appeal is to be by way of a new hearing and fresh evidence, or evidence in addition to or in substitution for the evidence received at the original proceedings, may be given. (5) After deciding the questions the subject of the appeal, the Supreme Court or court or tribunal may, unless it affirms the costs assessor's decision, make such determination in relation to the application as, in its opinion, should have been made by the costs assessor." 37It is convenient that I briefly comment on the operation of the 1987 Act and its successor, the 2004 Act (Some matters raised for which leave is sought probably involve a question of law and the appeal should be s 208L of the 1987 Act). 38In Chapmans Ltd v Yandell [1999] NSWCA 361, Fitzgerald JA (with whom Mason P and Davies AJA agreed) stated that it is important to keep in mind that the purpose of a requirement of leave to appeal is that it is intended to act as a filter to ensure that unsuitable appellant proceedings are not able to be brought with the demands which that places upon the resources of the court and the burden which it places upon other parties and the delays which it causes to other litigants: see Coulter v R (1988) 164 CLR 350 at 359. His Honour continued that if leave to appeal should be granted where there is some other matter which in justice required that leave to appeal be granted to allow that matter to be relitigated, the party seeking leave to appeal obviously bears the burden of establishing that justice does require that leave to appeal be granted. 39In both matters Mr Yohana seeks to raise the following matters in relation to s 208M. I shall refer to them in seriatim. 40Firstly, it was submitted by Mr Yohana that the purported determination of the costs assessor is a nullity in so far as on its face was said to have been made under the 2004 Act which had not relevant operation; and secondly, the purported "application: for costs assessment was a nullity in so far as on its face it was said to have been made under the 1987 Act and the 2004 Act to the extent it applied. 41Although the bills were given after the commencement of the 2004 Act, Mr Isaac's entitlement to assessment was governed by the 1987 Act, since he was first instructed by Mr Yohana before 1 October 2005, the day on which the 2004 Act commenced. The transitional provisions in respect of the 2004 Act provide in Schedule, 9 Part 2, at clause 18(1): "Subject to subclauses (2) and (3), Part 3.2 of this Act applies to a matter if the client first instructs the law practice on or after the commencement day, and Part 11 of the old Act continues to apply to a matter if the client first instructed the law practice in the matter before that day." 42The applicable Legal Profession Act is the 1987 Act. In the assessment of the second bill of costs, the costs assessor expressly stated that the 1987 Act is applicable. As to Mr Yohana's argument that that decision is a nullity, in the light of costs assessor Webley's assessment is concerned, this submissions cannot be right. As the power set out in both Acts is similar, costs assessor Taperell in carrying out the cost assessment of the first bill of costs had power to assess the bill of costs whether it be under the 1987 Act or the 2004 Act. In any event the applicant seeking the assessment in relation the first bill of costs relied on both Acts. 43Thirdly, Mr Yohana submits the application for assessment was a nullity in so far as it was made at a time after the applicant had ceased to exist. 44Mr Isaac's evidence is that from 1 January 2002 to 30 September 2004 he was a partner of the firm Barclay Benson Lawyers. Up until 30 September 2004, Barclay Benson Lawyers was a registered business name. From 1 October 2004 until 18 February 2010 , Mr Isaac carried on practice as a sole practitioner under the name Barclay Benson Solicitors. Mr Isaac originally had two partners in Barclay Benson Lawyers, Mark Williams and Steve Wilson. Under the terms agreed between Mr Williams, Mr Wilson and Mr Isaac were entitled to retain all the income and assets of the partnership and indemnified Mr Wilson in respect of any debts incurred in the partnership. 45It is most likely that the correct business name of the entity is now Barclay Benson Lawyers. The applications for costs assessment were made in the name of Barclay Benson Solicitors. In this regard, Latham J made an order in relation to the first bill of costs, that the plaintiff's name on the judgment be changed from Benson Barclay Solicitors to Benson Barclay Lawyers. I make the same order in relation to the judgment entered on 20 September 2010. 46On 30 September 2004, the partnership with Mr Williams was dissolved. At that time, Mr Williams and Mr Isaac agreed that Mr Isaac would recover all the outstanding debts owed including the debt by Mr Yohana to the partnership. 47Fourthly, the assessor erred in purporting to adjudicate upon any underlying dispute as to whether or not there was an agreement that the plaintiff not be charged for costs, which dispute should have been referred to a judicial officer with appropriate powers and jurisdiction. 48Judicial opinion has varied as to the extent of a costs assessor's power. In particular there are different approaches as to whether costs assessors have jurisdiction to interpret a costs agreement or authority to decide whether a costs agreement existed. Cases supporting the view that the role of the costs assessor is limited to determining purely the cost of the work done are the decisions of Dunford J in Muriniti v Lyons [2004] NSWSC 135 and Rothman J in Hall Chadwick v Doyle [ 2006] NSWSC 1195 . 49The contrary view was expressed in Wentworth v Rogers; Wentworth & Russo v Rogers [2006] NSWCA 145; (2006) 66 NSWLR 474 where Santow JA stated (at [38]-[43]; 484-486): "[40] The Court of Appeal [in Wentworth v Rogers ] implicitly accepted that with these powers, though falling short of curial, the costs assessor was not only empowered in the first instance to determine the terms of the retainer of counsel and solicitor but should do so. That approach recognises the expeditious administrative process for assessing costs under the Act. For most cases determination by the costs assessor should suffice without necessity for curial review. It would be unusual that the content of the costs agreement was not self-evident from its written record, or its interpretation so problematic that a costs assessor could not, in practice, reach a sufficiently reliable result. But the discretion to order curial review remains as a safeguard for the exceptional cases that warrant it. [41] Section 208(3)(b) expressly empowers the costs assessor to ascertain "whether a costs agreement exists, and its terms" . That, in my view, necessarily includes determining whether such agreement is within the definition of "costs agreement" in the Act and whether it is rendered void by s 184(4). [42] I consider that the Court of Appeal decision in Wentworth v Rogers [1999] NSWCA 403 must be followed. To the extent that the decision of Dunford J in Muriniti v Lyons [2004] NSWSC 135 is inconsistent, it should not be followed. [43] In Muriniti v Lyons , Dunford J concluded (at [56] to [58]) that the costs assessor, who set out to determine under s 208A and s 208B whether certain preconditions for the payment of costs had been fulfilled, should have declined to make a determination or issue a certificate. This was until the issue of whether or when the relevant costs were payable had been resolved by a court with power to require sworn evidence and have it tested by cross-examination. That reasoning, though not in relation to court-ordered costs, was inconsistent with the reasoning of the Court of Appeal to which I have referred and should not be followed." 50In the same decision Basten JA expressed doubts about this and (at [185]; 515-516) left the question open, and Hislop AJA (at [216]; 512) preferred to express no opinion on it, as the case could be disposed of without resolving it. 51On appeal, in Doyle v Hall Chadwick [2007] NSWCA 159 the Court of Appeal disagreed with Rothman J's view in Hall Chadwick v Doyle [2006] NSWSC 1195 as to the limited powers of costs assessors. The costs assessor took a wider view and Hodgson JA (with whom Mason P and Campbell JA agreed) said (at [55]-[62]): "JURISDICTION OF COSTS ASSESSOR [55] Both parties submitted that a costs assessor does have jurisdiction to construe a costs agreement and determine its effect. [56] In my opinion, s 208(3) of the 1987 Act makes it clear that this is so, at least where the assessment is between the lawyer and the client. However, I do not entirely agree with either of the opposing views expressed in the Muriniti litigation, that is, the view of Davies AJ in Muriniti v. Lyons [2000] NSWSC 680 and that of Dunford J in Muriniti v. Lyons [2004] NSWSC 135. ... [61] In my opinion, Davies AJ was correct to say that a costs assessor, assessing costs between a lawyer and client, can determine disputes as to the terms of the costs agreement, and Dunford J was wrong to say otherwise. However, where the existence of the terms of the agreement are in dispute in a way that would require the hearing of evidence to resolve, it may be appropriate for the costs assessor to decline to resolve the dispute; and in the Muriniti litigation, it would in my opinion have been open and reasonable for Davies AJ to have permitted the question to have been determined in the proceedings before him. As it turned out, the costs assessor did decline to resolve this question; and in my opinion, in those circumstances, the costs assessor should not have issued a certificate which could be converted into a judgment. That is, in a case where there is a real dispute on substantial grounds as to whether any costs are payable, a costs assessor should not complete an assessment by issuing a certificate unless satisfied that the costs are payable, because the certificate can be filed so as to take effect as a judgment. [62] In my opinion, this approach is consistent with the views of the Court of Appeal in Graham v. Aluma-Lite Pty. Limited (NSWCA, unreported, 25/3/97) and Wentworth v. Rogers [1999] NSWCA 403. In so far as there is a divergence of opinion in Wentworth v. Rogers [2006] NSWCA 145 as to the power of a costs assessor, in assessing party and party costs, to determine the terms and effect of the costs agreement of the party against whom the costs are sought, it is not necessary to address that divergence of opinion in this case." 52This recent Court of Appeal decision supports a broader view of the costs assessor's remit ( see also Levy v Bergseng [2008] NSWSC 294; (2008) NSWLR 178). It is likely that the costs assessors had jurisdiction to consider whether a costs agreement was in existence. 53There is authority to support the view that a costs assessor can, and at least ordinarily should, determine disputes as to liability to pay costs, as an incident of determining whether the costs are "fair and reasonable". 54Fifthly, Mr Yohana asserts that any claim for recovery of the costs would have been barred in time. Taking Mr Yohana's claim at its highest, if the limitation period is six years from the date that the work was completed. As the bills were filed in October 2010 only a small portion of the work done in 2004 could be statute barred. 55It is my view all of the matters for which Mr Yohana argues that leave should be granted have little merit, if any. Further matters that I consider being relevant to the issue of whether leave should be granted is that the amount in dispute and the costs that have been incurred after the certificates issued. The total of the two assessments is about $58,161.17. Litigation has already taken place aimed towards having costs assessments set aside. I do not think incurring further court time and legal costs is necessary. Taking all these matter into account leave to appeal is refused. 56The result is that leave to extend time to appeal and leave to appeal is not granted in both proceedings. The amended summonses are dismissed. 57Costs are discretionary. Costs usually follow the event. The plaintiff is to pay the defendant's costs as agreed or assessed.

The Court orders in both proceedings that: (1) Leave to extend time to appeal is refused. (2) Leave to appeal is refused. (3) The amended summonses filed 9 May 2011 are dismissed. (4) The plaintiff is to pay the defendant's costs as agreed or assessed. In proceedings 2010/237866 (5) Pursuant to UCPR 36.17, the plaintiff's name on the judgment entered on 20 September 2010 is changed from Barclay Benson Solicitors to Barclay Benson Lawyers.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 08 March 2012

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