Canadian Appeals Monitor

Information and Commentary on Upcoming and Recent Appeal Court Decisions

This Week at the SCC (11/04/2014)

A Commentary on Recent Legal Developments by the Opinions Group of McCarthy Tétrault LLP

Posted in This Week at the SCC
Anthony Alexander

This week, the Supreme Court of Canada granted leave to appeal in one case, and denied leave to appeal in two other cases, all likely to be of interest to Canadian business.

The Court granted leave to appeal from the Alberta ruling in Atco Gas and Pipelines Ltd. v Alberta, 2013 ABCA 310.   Under the applicable regime for setting consumer rates, the Alberta Utilities Commission has the power to consider expenditures undertaken by the regulated company.  At issue was the extent to which the cost-of-living adjustments owing under the company’s pension plans could be claimed by the company.  The Commission had characterized as excessive the company’s claim relating to its COLA obligations.  The Court of Appeal had confirmed the ruling of the Commission.

(By order of the Court, the Atco appeal will be heard together with the parallel Ontario appeal from Power Workers’ Union (Canadian Union of Public Employees, Local 1000) v. Ontario, 2013 ONCA 359.  The Supreme Court had separately granted leave to appeal the Ontario ruling several weeks ago.)

The Supreme Court refused leave to appeal the ruling of the Quebec Court of Appeal in Benedetti c. Syndicat des chargées et chargés de cours de l’UQAM (CSN), 2013 QCCA 2088.   That case focused on a union’s “duty to represent” one of its members.  The union refused to refer the member’s grievance to arbitration on the grounds that it had no chance of success.  Following a judicial review, and several appeals, the Court of Appeal confirmed the initial ruling that the union had acted improperly.

Lastly, the Court refused leave to appeal from the Ontario ruling  in Western Larch Limited v. Di Poce Management Limited, 2013 ONCA 722.   A partnership agreement included a buy-sell “shotgun clause,” and a dispute arose as to whether or not an offer under that clause had been properly made.  The motions judge had ruled the offer to be valid and effective (although it did not perfectly comply with the terms found in the clause).   The Court of Appeal affirmed this ruling, finding that the threshold of “strict compliance” had been satisfied.

The McCarthy Tétrault Opinions Group consists of members of the firm’s litigation department whose practices focus on written advocacy and the provision of strategic advice and opinions in the context of complex business disputes and transactions. The members of the Opinions Group are Anthony Alexander, Martin Boodman, Brandon Kain, Hovsep Afarian and Kirsten Thompson.

The Second Opinion: This Week at the Supreme Court of Canada (07/05/2014) Enforcement of Foreign Judgments in Canada through an Unrelated Canadian Subsidiary

Posted in This Week at the SCC
Martin Boodman

This week the Supreme Court of Canada granted an application for leave to appeal the decision of the Ontario Court of Appeal in Yaiguaje v. Chevron Corporation 2013 ONCA 758.  As a result, the Supreme Court of Canada will review the jurisdictional requirements for the enforcement of foreign judgments in Canada.

The case is particularly important to multi-national enterprises because it involves an attempt to enforce in Canada a foreign judgment against a non-Canadian judgment debtor and against its Canadian subsidiary, which was not a party to the litigation. The foreign judgment debtor had no presence and no assets in Canada.

The appeal raises several issues. The first issue is whether there must be a real and substantial connection between the subject matter of the litigation and Ontario for an Ontario court to have jurisdiction to enforce the foreign judgment. The earlier decisions held that no such requirement exists and accepted jurisdiction over the non-Canadian judgment debtor on the basis of valid service ex juris.

The second issue is whether the lower courts were correct in holding that an Ontario court has jurisdiction over a Canadian subsidiary of a non-Canadian foreign judgment debtor on the basis of its presence in Ontario and economic relationship with its ultimate parent company, the judgment debtor.

The third issue is whether a court has discretion to stay enforcement proceedings based on its perception that there is no reasonable prospect for recovery against either of the defendants, where the discretion is exercised prior to argument on the merits of the enforcement proceedings.

For an analysis of the Ontario Court of appeal decision, see The Second Opinion Canadian Subsidiaries Beware ? The Ontario Court of Appeal Addresses Enforcement of Foreign Judgments against Related Entities, December 20, 2013.

The McCarthy Tétrault Opinions Group consists of members of the firm’s litigation department whose practices focus on written advocacy and the provision of strategic advice and opinions in the context of complex business disputes and transactions. The members of the Opinions Group are Anthony Alexander, Martin Boodman, Brandon Kain, Hovsep Afarian and Kirsten Thompson.

The Second Opinion: A Defamation Claim without “Merit” — The BCCA Shields Directors from Liability for Statements made as part of Continuous Corporate Disclosure

A Commentary on Recent Legal Developments by the Opinions Group of McCarthy Tétrault LLP

Posted in The Second Opinion
Anthony Alexander

Public corporations are required by law to provide continuous disclosure of information likely to be relevant to existing or potential shareholders.  The directors of such corporations must be careful to ensure that such disclosure is timely and accurate, and that it cannot be characterized as misleading.  In recent years, corporate press releases, issued in order to comply with this continuous disclosure obligation, have been the subject of considerable litigation, most notably securities class actions.  In dismissing a claim alleging that such a press release was defamatory, a recent ruling of the British Columbia Court of Appeal — Merit Consultants International Ltd. v. Chandler, 2014 BCCA 121 — should be hailed for providing some protection to corporate directors in the fulfilment of their continuous disclosure duties.

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Hot Off the Press – Doing Business in Canada: Navigating Opportunities for Investment and Growth

Posted in Alternative Dispute Resolution, Class Actions

If your organization is currently thinking about establishing or acquiring a business in Canada, the newest edition of Doing Business in Canada, written by McCarthy Tétrault, will prove to be a valuable resource. The guide provides a broad overview of the legal considerations that non-residents should take into account to help ensure their success as they enter into a business venture in Canada. Each section offers timely information and insightful commentary on different areas of law.

The book includes a chapter on dispute resolution, with sections on:

  • Canada’s court system
  • class actions
  • alternative dispute resolution
  • electronic discovery

After downloading the interactive PDF or eBook, we encourage you to consult one of our lawyers for a more comprehensive analysis of the legal implications of your proposed venture.

Caution: An Entire Agreement Clause May Have Greater Implications Than Expected

Posted in Case Comments, Contracts, Corporate Law
Helen Richards

At issue in One West Holdings Ltd. v Greata Ranch Holdings Corp. et al. was whether an entire agreement clause which referred to multiple contracts could be used to incorporate an arbitration clause from one of the other contracts. The British Columbia Court of Appeal held that it could despite the fact that the contracts involved different parties.

Decisions

A number of parties, including Concord Okanagan Developments Ltd., entered into a limited partnership agreement (LPA) to form Greata Ranch Developments Limited Partnership. The LPA described a project management agreement (PMA) that was to be entered into between the Limited Partnership and One West Holdings Ltd. Notably, although One West was an affiliate of Concord Okanagan, it was not itself a party to the LPA. The Limited Partnership subsequently entered into the PMA with One West as contemplated in the LPA. When a dispute arose out of the PMA, certain parties to the Limited Partnership attempted to arbitrate the dispute pursuant to an arbitration clause found in the LPA. One West disputed the jurisdiction of the arbitrator on the basis that it did not sign the LPA and therefore was not bound by the arbitration clause. Both parties relied on the entire agreement clause which states:

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This Week at the SCC (28/03/14)

A Commentary on Recent Legal Developments by the Opinions Group of McCarthy Tétrault LLP

Posted in This Week at the SCC
Kirsten Thompson

The Supreme Court of Canada denied leave to appeal from two cases of interest to Canadian businesses, particularly insurers.

The application for leave to appeal in Malhotra v. State Farm Fire and Casualty Company, 2013 ONCA 326 concerns two orders appointing an umpire under s. 128 of the Ontario Insurance Act. The dispute was in respect to five properties owned by the applicant, Ms. Malhotra, and insured by the respondent.

The applicant maintained that each property required a separate umpire be appointed but the Court of Appeal dismissed the appeal of the decisions appointing a single umpire for all five properties. In its view, the power to appoint an umpire under s. 128 of the Insurance Act is discretionary, and nothing in s. 128 prohibits a judge from appointing a single umpire to deal with multiple properties. The Supreme Court of Canada denied leave to appeal.

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The Second Opinion: Appeal Court Confirms the Narrow Scope of the “Forum of Necessity” Doctrine

A Commentary on Recent Legal Developments by the Opinions Group of McCarthy Tétrault LLP

Posted in The Second Opinion
Hovsep Afarian

Can a Court assume jurisdiction over a claim when there is no “real and substantial” connection between the claim, the defendant and the forum? The Ontario Court of Appeal recognized such a theoretical possibility, on the basis of the so-called “forum of necessity” doctrine, in its decision in Van Breda v. Village Resorts Ltd., 2010 ONCA 84. On further appeal, the Supreme Court of Canada did not directly address this doctrine but left room for its “possible application” in the future: 2012 SCC 17 at para. 100. The Ontario Court of Appeal recently revisited and defined the parameters of the forum of necessity in West Van Inc. v. Daisley, 2014 ONCA 232.

In West Van, the plaintiff sought to sue, in Ontario, a North Carolina attorney and law firm for alleged professional negligence in a North Carolina proceeding involving underlying events in Connecticut. The defendants sought to stay the Ontario proceeding on the basis that the claim had no real and substantial connection with Ontario. The plaintiff conceded the absence of a real and substantial connection with Ontario but argued that Ontario should nevertheless assume jurisdiction on the basis of the forum of necessity doctrine. More specifically, the plaintiff put forward evidence that it had contacted 31 different lawyers in two main cities in North Carolina who had all refused to take on the plaintiff’s claim given who the proposed defendants were. The motion judge granted the stay without addressing the forum of necessity doctrine.

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This Week at the SCC (21/03/14)

A Commentary on Recent Legal Developments by the Opinions Group of McCarthy Tétrault LLP

Posted in This Week at the SCC
Brandon Kain

The Supreme Court of Canada released one judgment this week of significant interest to the legal profession.

In Reference re Supreme Court Act, ss. 5 and 6, 2014 SCC 21, a 6-1 majority ruled that the appointment of the Honourable Marc Nadon and his swearing-in as a judge of the Supreme Court of Canada were void ab initio, and that he remains a judge of the Federal Court of Appeal.  The Court clarified that s. 6 of the Supreme Court Act, which requires that three of its nine judges be appointed “from among the judges of the Court of Appeal or of the Superior Court of the Province of Quebec or from among the advocates of that Province”, does not permit the appointment of persons who are not current members of the Quebec courts or Barreau du Québec at the time of their appointment, even if they previously occupied that position.

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Are pre-contractual representations “continuing”? Even if the contracting parties change?

Posted in Case Comments, Contracts, Corporate Law
Sam Rogers

Circumstances change and what is true today may not be true tomorrow. For that reason, some representations carry with them the obligation to advise the representee if the relevant circumstances change. These are usually referred to as “continuing” representations.

But can a continuing representation carry with it the obligation to update a third party, to whom the representation was not even made? The UK Supreme Court says it can in Cramaso LLP v Ogilvie-Grant, Earl of Seafield and Others, a case with a peculiar set of facts which may have broad implications for parties engaged in pre-contractual negotiations.

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This Week at the SCC (14/03/14)

A Commentary on Recent Legal Developments by the Opinions Group of McCarthy Tétrault LLP

Posted in This Week at the SCC
Brandon Kain

The Supreme Court of Canada granted leave to appeal this week from one case of interest to Canadian businesses and professions: Thompson v. Canada (National Revenue), 2013 FCA 197.  The Thompson appeal concerns whether a lawyer who received a Requirement to produce information under s. 231.2(1) of the Income Tax Act relating to his accounts receivable can be compelled to divulge the names of his clients.  The Court will be asked to determine whether s. 231.2(1) gives lawyers the opportunity to resist disclosure by first establishing that solicitor-client privilege protects the names of their individual clients before a judge.

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Beware: When Investors Act Tardily in Denouncing Suspect Movements in their Brokerage Accounts, They Have only Themselves to Blame

Posted in Case Comments, Securities
Julie-Martine LorangerMiguel BourbonnaisEmira Tufo

On February 11, 2014, the Quebec Court of Appeal rendered its judgment in Succession Huppé c. Valeurs mobilières Banque Laurentienne, 2014 QCCA 294 confirming a judgment of the Superior Court which had rejected an investor’s claim against his investment advisor and the latter’s brokerage firm because the investor had waited too long before denouncing the renegade.

Mr. Huppé was a Hydro-Québec retiree.  At the beginning of December 1999, he entrusted a portfolio worth some $319,222 to one Mr. Duplessis of Valeurs Mobilières Banque Laurentienne (VMBL), whom he authorized to effect securities transactions in his name with the account which Mr. Huppé held with BNP.  Mr. Duplessis behaved himself at first, but by September 2000 had taken matters into his own hands: Mr. Huppé noticed that Mr. Duplessis had been making unauthorized margin calls.  Mr. Huppé warned Mr. Duplessis to cease and desist, but continued their business relationship nevertheless.  Mr. Duplessis paid no heed.  In January 2001, Mr. Huppé noticed additional unauthorized transactions.  Although the value of his portfolio had by then grown to $350,135, Mr. Huppé lost faith in Mr. Duplessis.  It was only in June 2001, however, that he began to complain about his investment advisor, and not before May 2002 that he issued instructions to BNP to close his brokerage account.  By this time, however, Mr. Huppé had suffered a loss.

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Multi-Jurisdictional Class Actions: The Creation of Barriers by the BC Court of Appeal

Posted in Case Comments, Class Actions, Constitutional
Kate Findlay

In a surprise decision, the British Columbia Court of Appeal has broken with the superior courts of British Columbia, Ontario and Quebec by holding that constitutional limits prevent a superior court judge from sitting outside of his own province. The Court of Appeal’s decision suggests limits to the inherent jurisdiction and discretion of superior courts and will have profound effects upon the ease and efficiency with which judges can hear multi-jurisdictional matters, in particular class actions. Decisions by the Court of Appeal in Ontario and Quebec  on the same issue are pending.

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This Week at the SCC (07/03/14)

A Commentary on Recent Legal Developments by the Opinions Group of McCarthy Tétrault LLP

Posted in This Week at the SCC
Hovsep Afarian

The Supreme Court of Canada denied leave to appeal this week in one case of interest to Canadian businesses.

In Springdale Pizza Depot Ltd. et al v. 2189205 Ontario Inc. et al, the Supreme Court of Canada  declined to grant leave to appeal from an Ontario Court of Appeal decision which addressed the availability of the right of set-off in the context of a statutory right of rescission in Ontario’s franchise legislation.

The McCarthy Tétrault Opinions Group consists of members of the firm’s litigation department whose practices focus on written advocacy and the provision of strategic advice and opinions in the context of complex business disputes and transactions.  The members of the Opinions Group are Anthony Alexander, Martin Boodman, Brandon Kain, Hovsep Afarian and Kirsten Thompson.

Securities Secondary Market Liability in Quebec To Be Discussed by the Supreme Court of Canada

Posted in Case Comments, Case Previews, Class Actions, Securities
Marc-Andre Russell

On February 20, 2014, the Supreme Court of Canada granted leave to appeal from the first decision from the Québec Court of Appeal on the statutory secondary market liability regime adopted in 2007, pursuant to a reform of the Quebec Securities Act, R.S.Q. c. V-1.1 (“QSA”).

Material Facts

Under the QSA, Theratechnologies inc. (“Thera”) is a reporting issuer which must comply with continuous disclosure obligations. In 2009, Thera filed an application to the Food and Drug Administration (“FDA”) to commercialize a major drug called Tesamoreline. In the course of the approval process, on May 25, 2010, the FDA published on its website information compiled at that time in the approval process. This lead to some financial analytics companies (Bloomberg, Thomson, etc.) to publicly share their concerns about potential risks based on their reading of the information published by the FDA. The market reacted intensely to the news released; Thera’s stock was heavily traded and lost 58% of its value. Thera’s stock was the object of a cease trading order on May 27. When trading resumed on the following days, and after Thera confirmed that the FDA had approved Tesamoreline as a new drug, the stock regained its value.

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The Second Opinion: Who needs Lawyers? When Laypeople draft Contracts that are Uncertain, Ambiguous and Incomplete, the Courts must strive for a “Sensible and Businesslike” Interpretation, says the ABCA

A Commentary on Recent Legal Developments by the Opinions Group of McCarthy Tétrault LLP

Posted in The Second Opinion
Anthony Alexander

When complex commercial contracts have been drafted entirely by laypeople — without any input or advice from legal counsel — issues of interpretation can be a challenge.  This is particularly true in circumstances where, years later, the parties themselves disagree as to specific elements of their agreement.  In a recent ruling, Schmidt v. Wood, 2014 ABCA 80, the Alberta Court of Appeal demonstrates the efforts expected of a court in order to find a satisfactory construction of such agreements.

At issue were two interlocking contracts addressing the marketing of current and future products invented by one of the parties.  As acknowledged by the Court, the agreements were not models of perfect drafting:

The original two contracts are obviously not drafted by lawyers. Parts are ambiguous or uncertain, and there are gaps in the topics covered.

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Piercing the corporate veil may be easier than you think

Posted in Case Comments, Contracts, Corporate Law
Keegan Boyd

How do corporate and personal liability intersect in a corporation that has only one officer, director and shareholder?  In the recent Shoppers Drug Mart v. 6470360 Canada Inc. case, the Court of Appeal helped to clarify when the person behind the corporation will be found liable.

Background

In October 2005, Shoppers Drug Mart (“Shoppers”) contracted with Energyshop Consulting Inc. (“Energyshop”) to manage and pay its utility bills on a nationwide basis.  Michael Wayne Beamish (“Beamish”) negotiated the contract on behalf of Energyshop, which had not yet been incorporated.  Beamish later incorporated 6470360 Canada Inc. c.o.b. as Energyshop Consulting Inc./Powerhouse Energy Management Inc. (“647”).

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The Second Opinion: When is a Little Knowledge a Dangerous Thing? When it is used to Disqualify In-House Counsel

A Commentary on Recent Legal Developments by the Opinions Group of McCarthy Tétrault LLP

Posted in The Second Opinion
Anthony Alexander

A powerful tool in the litigation arsenal is the bringing of a motion to remove counsel from a file, either because she possesses disqualifying confidential information or faces a disqualifying conflict of duty.  A recent ruling of the Federal Court of Appeal, Valeant Canada LP v. Canada, 2014 FCA 50, confirms that even a party’s in-house counsel is potentially vulnerable to such an attack.

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The Second Opinion: Mandatory Audit Rights and the CBCA

A Commentary on Recent Legal Developments by the Opinions Group of McCarthy Tétrault LLP

Posted in The Second Opinion
Brandon Kain

Can a private corporation decline to provide audited financial statements to its shareholders without their unanimous consent on the ground that it is too expensive for it to do so?  The British Columbia Court of Appeal recently addressed this question in Li v. Global Chinese Press Inc, 2014 BCCA 53, and held that the answer is no, at least for companies that are incorporated under the Canada Business Corporations Act (“CBCA“).  The decision in Li is an important appellate clarification of this point, and is one that private corporations should bear in mind in their dealings with shareholders.

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The Second Opinion: Production Orders and Electronic Information – Appeal Court Offers a List of Considerations

A Commentary on Recent Legal Developments by the Opinions Group of McCarthy Tétrault LLP

Posted in The Second Opinion
Kirsten Thompson

The Nova Scotia Court of Appeal recently grappled with questions of relevance, proportionality and privacy in the context of whether or not to order the production of electronic information.

The court in Laushway v. Messervey, 2014 NSCA 7 affirmed an order requiring a plaintiff to produce a hard drive for forensic review because it contained metadata (essentially data about data) which could show how much time the plaintiff spent at his computer, a point central to his lost income claim.

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The Second Opinion: Non-Parties May Be Bound by a Forum Selection Clause

A Commentary on Recent Legal Developments by the Opinions Group of McCarthy Tétrault LLP

Posted in The Second Opinion
Hovsep Afarian

Can a party that has not signed an agreement containing a forum selection clause nevertheless be bound by it? The Ontario Court of Appeal addressed this question in Aldo Group Inc. v. Moneris Solutions Corporation, 2013 ONCA 725. The Court in Aldo contemplated the application of forum selection clauses to third parties in limited circumstances.

The salient facts of the decision in Aldo are as follows. MasterCard entered into a license agreement with a Bank, allowing the Bank to issue credit cards (the “License Agreement”). The License Agreement contained a forum selection clause identifying New York as the chosen forum for adjudicating disputes. The Bank entered into an agreement with Moneris Solutions Corporation (“Moneris”) to allow Moneris to process the Bank’s credit credit transactions (the “Processing Agreement”). The Processing Agreement also contained a forum selection clause in favour of New York. Moneris then entered into a Merchant Agreement with Aldo Group Inc. (“Aldo”). The Merchant Agreement had a forum selection clause in favour of Ontario.

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The Final Word (Again?) On Limitation Periods for Securities Class Actions

Posted in Case Comments, Class Actions, Securities
Elder MarquesTimothy Chapman-Smith

The Ontario Court of Appeal’s decision in Green represents yet another plaintiff-friendly class action development from the Canadian courts, this time in the context of limitation periods.  Less than two years after its watershed decision in Timminco, Ontario’s highest court reversed itself and in a decision authored by Feldman J.A. re-cast the limitation period regime governing secondary market civil liability under the Ontario Securities Act.  In Green v. CIBC, 2014 ONCA 90, a five-member panel of the Court overturned Sharma v. Timminco, 2012 ONCA 107 and gave class action plaintiffs the protection of s. 28 of the Ontario Class Proceedings Act (suspending limitation periods) without first requiring them to bring a leave motion under s. 138.8 of the Securities Act.

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“Stop and Identify” Yourself, to Avoid Personal Liability when Acting on Behalf of a Company

Posted in Case Comments, Contracts, Corporate Law
Marie-Hélène Beaudoin

Third parties must know exactly who they are entering into a contract with, especially when dealing with a limited liability company. That said, the identity of the true contracting party may not be clear when an officer, director or employee of a company is negotiating on behalf of the company. Indeed, third parties are generally entitled to believe that these individuals are dealing on their own behalf, rather than on behalf of a company to which they are outsiders.

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The Second Opinion: Limitation Periods and Unjust Enrichment — Clarity and Complexity from the ONCA

A Commentary on Recent Legal Developments by the Opinions Group of McCarthy Tétrault LLP

Posted in The Second Opinion
Anthony Alexander

A recent ruling of the Ontario Court of Appeal, McConnell v. Huxtable, 2014 ONCA 86, provides useful clarification of two potentially complex questions — (1) The limitation period applicable to a claim for a constructive trust based on unjust enrichment, and (2) the sometimes confusing overlap between the Ontario Limitations Act, 2002 and the Ontario Real Property Limitations Act.

The appeal flowed from a family law dispute.  The male appellant had owned a number of properties (held in his own name) during the time the parties were a couple.   The female respondent argued that she had contributed to the acquisition and maintenance of these properties, and should be able to claim either a proprietary interest in them, or monetary compensation in lieu thereof.

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