1
Fair Work Act 2009
s.394 - Application for unfair dismissal remedy
Mr Neal Maxwell
v
Bardrill Corporation Ltd
(U2015/2755)
SENIOR DEPUTY PRESIDENT
RICHARDS
BRISBANE, 22 JUNE 2015
Summary: unfair dismissal - objection under s.389 - objection not made out - no consultation
in compliance with modern award - whether dismissal harsh, unjust or unreasonable - s.387 -
consultation would not have changed result - application under s.394 dismissed.
[1] This decision concerns an application by Mr Neal Samuel Maxwell under s.394 of the
Fair Work Act 2009 (“the Act”) by which he seeks an unfair dismissal remedy in respect of
his termination from Bardrill Corporation Ltd (“the employer”) on 14 January 2015. The
employer carries out earthwork related civil constructing contractor services, and operates
principally in the oil and gas fields around northern South Australia and south-western
Queensland as well as in eastern Queensland (in the vicinity of Roma).
[2] Mr Maxwell was employed for a period of some nine years by the employer, during
which time he performed duties as a full-time Field Administrator. He performed these duties
in Ballera until, in September 2011, he was transferred to Roma in a similar capacity, on a fly
in fly out two-on-two-off roster.
[3] Mr Maxwell claims that on 14 January 2015 he received a telephone call from Mr
Reid Toogood, who is the CEO for the employer.
[4] Mr Toogood explained to Mr Maxwell that the administrative position performed by
him was no longer required and that his duties would be performed from Adelaide in the
future. Mr Maxwell was informed that he was to be made redundant immediately.
[5] Mr Brett Ryan, who appeared as a witness for Mr Maxwell, gave evidence that he
received a telephone call from Mr Toogood on the same day and for the same purpose.
[6] The employer’s notification of redundancy relevantly provides as follows:
“As discussed today unfortunately the oil and gas industry is experiencing a significant
downturn. The advice given to us by our client is that this is likely to continue for the
foreseeable future. This has forced the Company to review all areas of cost and to
restructure certain functions of the business to ensure that it can continue to maintain
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DECISION
E AUSTRALIA FairWork Commission
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its presence in eastern Queensland (EQ) and the Cooper basin (CB). This week the
decision has been taken to change the way that administration in EQ will be
completed. As a result the position that you currently fill of fly in/fly out
Administration Officer has been made redundant and your employment with Bardrill
is terminated with immediate effect. [...]”
[7] The employer took the view that Mr Maxwell was unable to agitate his application for
relief for reasons that Mr Maxwell was made genuinely redundant for the purposes of s.389 of
the Act, and as such could not make an application (given the operative effect of s.385(d) of
the Act). That is, Mr Maxwell had not been dismissed in accordance with the Act, and could
not make an application under s.394 of the Act.
[8] Section 389 of the Act provides as follows:
389 Meaning of genuine redundancy
(1) A person’s dismissal was a case of genuine redundancy if:
(a) the person’s employer no longer required the person’s job to be performed
by anyone because of changes in the operational requirements of the
employer’s enterprise; and
(b) the employer has complied with any obligation in a modern award or
enterprise agreement that applied to the employment to consult about the
redundancy.
(2) A person’s dismissal was not a case of genuine redundancy if it would have been
reasonable in all the circumstances for the person to be redeployed within:
(a) the employer’s enterprise; or
(b) the enterprise of an associated entity of the employer.
[9] The onus to make out the grounds under s.389 of the Act falls upon the employer.
[10] The Explanatory Memorandum to the Fair Work Bill 2008 provides some insight into
the scope of meaning of a redundancy as contemplated under the Act:
Clause 389 – Meaning of genuine redundancy
1546. This clause sets out what will and will not constitute a genuine redundancy. If a
dismissal is a genuine redundancy it will not be an unfair dismissal.
1547. Paragraph 389(1)(a) provides that a person’s dismissal will be a case of genuine
redundancy if his or her job was no longer required to be performed by anyone
because of changes in the operational requirements of the employer’s enterprise.
Enterprise is defined in clause 12 to mean a business, activity, project or undertaking.
1548. The following are possible examples of a change in the operational requirements
of an enterprise:
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a machine is now available to do the job performed by the employee;
the employer’s business is experiencing a downturn and therefore the employer
only needs three people to do a particular task or duty instead of five; or
the employer is restructuring their business to improve efficiency and the tasks
done by a particular employee are distributed between several other employees
and therefore the person’s job no longer exists.
1549. It is intended that a dismissal will be a case of genuine redundancy even if the
changes in the employer’s operational requirements relate only to a part of the
employer’s enterprise, as this will still constitute a change to the employer’s
enterprise.
1550. Paragraph 389(1)(b) provides that it will not be a case of genuine redundancy if
an employer does not comply with any relevant obligation in a modern award or
enterprise agreement to consult about the redundancy. This does not impose an
absolute obligation on an employer to consult about the redundancy but requires the
employer to fulfil obligations under an award or agreement if the dismissal is to be
considered a genuine redundancy.
1551. Subclause 389(2) provides that a dismissal is not a case of genuine redundancy
if it would have been reasonable in all the circumstances for the person to be
redeployed within the employer’s enterprise, or within the enterprise of an associated
entity of the employer (as defined in clause 12).
1552. There may be many reasons why it would not be reasonable for a person to be
redeployed. For instance, the employer could be a small business employer where
there is no opportunity for redeployment or there may be no positions available for
which the employee has suitable qualifications or experience.
1553. Whether a dismissal is a genuine redundancy does not go to the process for
selecting individual employees for redundancy. However, if the reason a person is
selected for redundancy is one of the prohibited reasons covered by the general
protections in Part 3-1 then the person will be able to bring an action under that Part in
relation to the dismissal. [...] [My emphasis]
[11] The employer contends that the business conditions in 2014/2015 were such that it
was required to reduce its operating costs.
[12] On 23 December 2014, Mr Toogood (as he explained through his own evidence)
required managers and supervisors to communicate a statement at the toolbox sessions that
day.
[13] The substance of that statement was as follows:
The collapse of oil prices had led to a rapid diminution in demand from its key
client, Santos;
Road crews had ceased and there had been a reduction in lease builds planned as the
number of exploration rigs was reduced in the Cooper Basin and there had been a
similar collapse in demand in the East Queensland region; and
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This difficulty in the business cycle would persist through 2015, but would likely
correct itself to some measure in 2016.
[14] On 10 February 2015 a further statement was conveyed at the toolbox meetings. It
provided as follows, in summary:
The business environment had worsened since December 2014;
Oil prices had not improved;
Santos had cut its operating budget significantly;
There was no work in Moomba past March 2015;
There would be a 50% cut to normal activity in South Australia and up to 80% in
East Queensland (and this might persist for a period of between six months and two
years);
The employer had restructured the administrative, project management and
supervision roles in both Moomba and East Queensland to “try and get our overhead
costs under control”;
“A lot of operators that finished their roster have elected to take severance or went
home to wait for a call to return”.
[15] On 11 March 2015, Mr Toogood issued a further statement through the toolbox
process. Its message was blunt:
The global price for oil remained low and producer share prices were down;
Job losses are occurring throughout the industry, with Santos announcing a further
200 redundancies bringing the total to 720 so far;
“Our eastern Queensland business has hit bottom and we need to desperately bring
our overhead costs there under control”;
Voluntary redundancies will be sought in eastern Queensland and efforts will be
made to “reshuffle people between locations and keep everyone who wants a job in a
job”;
Staff will be asked to take annual leave or long service leave in the hope that things
will improve in time;
The business is seeking work in areas in which it had not previously sought to
tender; and
Various salaried roles have been restructured.
[16] These communiqués require further context.
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[17] To this end, Mr Toogood further explained that in May 2014 the employer lost a
contract for approximately half of the work it was performing for Santos located in the
Queensland sector of the Cooper basin (in south-western Queensland).
[18] As a consequence, numerous positions were made redundant in that area.
[19] Mr Toogood contended that Mr Maxwell was engaged to perform administrative
duties in respect of the activities based around Roma, in eastern Queensland. Following the
collapse of the oil price in late 2014 the share price for Santos was effectively halved and it
reduced its capital budget significantly (which had a consequent knock-on effect for the
employer’s business).
[20] It was these circumstances that gave rise to the 23 December 2014 communication
referred to above.
[21] Following Mr Toogood meeting with a Santos representative on 7 January 2015, he
was advised that at least half of the work that the employer was performing on behalf of
Santos would no longer be available (with Santos reducing its subcontractors’ staff by 1200
and making 720 of its direct employees redundant).
[22] Because of this information, and the collapse in the demand for its services from its
principal client, Mr Toogood estimated that 50 to 60 employees would need to leave the
business immediately.
[23] The first round of redundancies were implemented by Mr Toogood on 14 January
2015 (about one week following his meeting with the Santos representative). It was at this
time that Mr Toogood telephoned Mr Maxwell, amongst others, to advise of the necessity for
the position to be declared redundant. Mr Maxwell was advised of this situation whilst he was
at home and before he had to recommence his swing in Roma. Mr Maxwell was paid his
entitlements in respect of redundancy and accrued a gross termination payment of almost
$79,000 (including 16 weeks redundancy pay).
[24] Mr Toogood explained that Mr Maxwell’s role and functions as they were performed
in Roma were absorbed into existing administrative functions located in the employer’s head
office in Adelaide.
[25] Mr Toogood also gave evidence that prior to Christmas 2014 there had been 50
employees engaged in the employer’s business in or about Roma. At the present time there is
only one employee engaged in the Roma area, and there is no sign of any upturn in Santos
activities (either in that area or in the Cooper basin in northern South Australia).
[26] Mr Maxwell complained that he was not consulted with about the change in the
organisation of the business and there was no discussion with him about ways in which the
impact of the changes might be mitigated short of redundancy. Mr Ryan made similar claims.
[27] It appears that the only consultation Mr Maxwell received in relation to the effects of
the collapse in oil prices upon his position prior to 14 January 2015 was by way of the
December 2014 toolbox communiqué from Mr Toogood, to which I have referred above. But
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even here, Mr Maxwell contends he must have inadvertently missed reading the communiqué
on his email.
[28] Mr Maxwell also contends that his employer was looking for an administrative
employee only a week or so after his own position was made redundant. An advertisement on
SEEK was brought to Mr Maxwell’s attention on 3 February 2015 and had allegedly been
posted on the site on 21 January 2015, which was one week after Mr Maxwell’s position was
made redundant. Mr Maxwell also claims that he was unaware of any downturn affecting the
business and that an email purportedly sent to all staff in respect of such circumstances was
not received by him.
[29] Insofar as Mr Maxwell so argued, he was contending that the redundancy was not real
or authentic and that his position was still required.
Consideration of “whether genuine redundancy”
[30] In order to attract the defence under s.389 of the Act, the employer must firstly
demonstrate that there was a real or authentic redundancy for operational reasons.
[31] Mr Toogood’s evidence in this regard is compelling. It is set out above and does not
require me to restate it. In essence, changes in the international oil price lead to a collapse in
capital expenditure from its principal client and this had a consequent knock-on effect on the
demand for the employer’s subcontracting services in south-west Queensland, eastern
Queensland, and northern South Australia.
[32] There is no reason for me not to accept Mr Toogood’s evidence as being truthful in
respect of the circumstances the employer’s business faced and the necessity to respond in the
manner that it did in order to rapidly reduce its operational costs. Redundancies were one
device for managing its costs.
[33] Mr Maxwell’s position was made redundant and the surviving elements of the duties
and tasks that fell within that role were absorbed within other roles and administrative
positions in Adelaide.
[34] There appears to be no merit to Mr Maxwell’s claim that his position was still required
regardless of the business circumstances because there was evidence that another
administrative role had been created some two weeks following his redundancy taking effect.
[35] Mr Toogood acknowledged that the advertisement for an administrative role - not the
same as that previously held by Mr Maxwell - was placed on SEEK. He contended that
following the restructure in January 2015, he was effectively uncertain as to whether the
decision to integrate the administrative functions from Roma into the remaining Adelaide
administrative roles would work, so he initiated the recruitment action (as an “insurance
policy” it was said).
[36] But a short time after so doing Mr Toogood was satisfied the restructure would yield
the result he anticipated, and as such the SEEK advertisement was not actioned. That is, no
person was recruited to fill the position advertised on SEEK.
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[37] Given this, it cannot be said Mr Maxwell’s position was not redundant at the relevant
time (that being January 2015). Mr Maxwell’s position was not resurrected upon his
termination and performed by a new employee, and there is no evidence that the position was
continuously required beyond the date of Mr Maxwell’s termination.
[38] In respect of the requirements of s.389(1)(b) of the Act, the employer is obligated to
comply with the requirements of a modern award or enterprise agreement that applied to the
employer’s enterprise.
[39] The consultation provisions relevant to the employer’s business are clause 8.1 of the
Clerks—Private Sector Award 2010 (“the modern award”), which provides as follows:
8. Consultation
8.1 Consultation regarding major workplace change
(a) Employer to notify
(i) Where an employer has made a definite decision to introduce major
changes in production, program, organisation, structure or technology
that are likely to have significant effects on employees, the employer
must notify the employees who may be affected by the proposed
changes and their representatives, if any.
(ii) Significant effects include termination of employment; major
changes in the composition, operation or size of the employer’s
workforce or in the skills required; the elimination or diminution of job
opportunities, promotion opportunities or job tenure; the alteration of
hours of work; the need for retraining or transfer of employees to other
work or locations; and the restructuring of jobs. Provided that where
this award makes provision for alteration of any of these matters an
alteration is deemed not to have significant effect.
(b) Employer to discuss change
(i) The employer must discuss with the employees affected and their
representatives, if any, the introduction of the changes referred to in
clause 8.1(a), the effects the changes are likely to have on employees
and measures to avert or mitigate the adverse effects of such changes on
employees and must give prompt consideration to matters raised by the
employees and/or their representatives in relation to the changes.
(ii) The discussions must commence as early as practicable after a
definite decision has been made by the employer to make the changes
referred to in clause 8.1(a).
(iii) For the purposes of such discussion, the employer must provide in
writing to the employees concerned and their representatives, if any, all
relevant information about the changes including the nature of the
changes proposed, the expected effects of the changes on employees
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and any other matters likely to affect employees provided that no
employer is required to disclose confidential information the disclosure
of which would be contrary to the employer’s interests.
8.2 Consultation about changes to rosters or hours of work
(a) Where an employer proposes to change an employee’s regular roster or
ordinary hours of work, the employer must consult with the employee or
employees affected and their representatives, if any, about the proposed
change.
(b) The employer must:
(i) provide to the employee or employees affected and their
representatives, if any, information about the proposed change (for
example, information about the nature of the change to the employee’s
regular roster or ordinary hours of work and when that change is
proposed to commence);
(ii) invite the employee or employees affected and their representatives,
if any, to give their views about the impact of the proposed change
(including any impact in relation to their family or caring
responsibilities); and
(iii) give consideration to any views about the impact of the proposed
change that are given by the employee or employees concerned and/or
their representatives.
(c) The requirement to consult under this clause does not apply where an
employee has irregular, sporadic or unpredictable working hours.
(d) These provisions are to be read in conjunction with other award provisions
concerning the scheduling of work and notice requirements.
[40] This statutory requirement under s.389(1)(b) of the Act requires a finding of fact. The
subsection is not predicated upon a finding based on the Commission reaching a requisite
degree of satisfaction on the basis of the reasonableness and practicality of the circumstances
facing the employer (see by contrast Commissioner Cambridge in McDonald v Central Coast
Commercial Properties & Projects Pty Ltd [2010] FWA 6626 (PNS 28-29)).
[41] Section 389(1)(b) of the Act is not made out unless the various requirements of the
relevant consultation clause (as set out above) are demonstrably discharged by the employer.
[42] In this case, the employer had not completed the consultation requirements. The
employer contends that its effort to consult with Mr Maxwell was affected by his fly in-fly out
arrangements. The fact Mr Maxwell’s arrangements were so affected does not mean that Mr
Maxwell was at all times un-contactable in a prior period (that is, between 7 January and 14
January 2015), and before such time as his dismissal was given effect.
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[43] There was no notification in advance of the decision to make Mr Maxwell’s position
redundant for the purposes of clause 8.1(a)(i) of the modern award, upon the Company
making the definite decision to introduce the major change.
[44] There was no discussion prior to the dismissal taking effect as to the potential for there
to be mitigating courses of action open to the employer.
[45] Mr Toogood provided no explanation as to why he could not have acted earlier to at
least give some opportunity for consultation to occur prior to the dismissal taking effect for
the purposes of clause 8.1(b)(ii) of the modern award.
[46] Further, there appears to be no document to which I was referred for the purposes of
satisfying the requirements of clause 8.1(b)(iii) of the modern award, either.
[47] The toolbox communiqué of 23 December 2014 does not constitute consultation. It is
a broad sketch of the business environment but provides no particularised information about
redundancies as such, or what parts of the business may be affected (let alone which
employees may be affected).
[48] The consultation requirements regarding major workplace change as set out in the
modern award were not discharged by the employer and the employer, as a consequence,
cannot claim the defence under s.389 of the Act.
[49] Because I have so found, there is no requirement for me to give consideration to
whether or not the employer complied with s.389(2) of the Act. Though I add
notwithstanding, that given the seriousness of the business and operational circumstances the
employer faced, the scope for redeployment would have been limited indeed.
[50] Because of my findings above, I must now turn to consider the substantive application
in the context of the requirements of s.387 of the Act.
LEGISLATIVE REQUIREMENTS
[51] The relevant legislative provisions arise under s.387 of the Act, which reads as
follows:
387 Criteria for considering harshness etc.
In considering whether it is satisfied that a dismissal was harsh, unjust or
unreasonable, the FWC must take into account:
(a) whether there was a valid reason for the dismissal related to the person’s
capacity or conduct (including its effect on the safety and welfare of other
employees); and
(b) whether the person was notified of that reason; and
(c) whether the person was given an opportunity to respond to any reason
related to the capacity or conduct of the person; and
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(d) any unreasonable refusal by the employer to allow the person to have a
support person present to assist at any discussions relating to dismissal; and
(e) if the dismissal related to unsatisfactory performance by the person—
whether the person had been warned about that unsatisfactory performance
before the dismissal; and
(f) the degree to which the size of the employer’s enterprise would be likely to
impact on the procedures followed in effecting the dismissal; and
(g) the degree to which the absence of dedicated human resource management
specialists or expertise in the enterprise would be likely to impact on the
procedures followed in effecting the dismissal; and
(h) any other matters that the FWC considers relevant.
CONSIDERATION
Whether there was a valid reason for the dismissal related to the person’s capacity or
conduct (including its effect on the safety and welfare of other employees)
[52] The Full Bench in UES (Intl) Pty Ltd v Leevan Harvey [2012] FWAFB 5241 (“Re:
UES”) found that a dismissal for operational reasons was not a dismissal related to an
employee’s capacity or conduct. That is, a dismissal for an operational reason could not be a
valid reason for a dismissal under s.387(a) of the Act.
[53] I found above that the decision to bring about the dismissal of Mr Maxwell was
because of an operational reason. This is not a matter relevant to s.387 of the Act. As a
consequence, the circumstances bear in neutral terms upon the ultimate finding as to whether
or not Mr Maxwell was dismissed harshly, unjustly or unreasonably.
Whether the person was notified of that reason
[54] Given the circumstances referred to immediately above, Mr Maxwell cannot be said to
have been notified of the valid reason in respect of his capacity or conduct.
[55] As Mr Maxwell was dismissed because of an operational reason, the absence of
notification in the terms of s.387(b) of the Act is a neutral consideration for purposes of my
ultimate finding.
Whether the person was given an opportunity to respond to any reason related to the
capacity or conduct of the person
[56] For the reasons referred to above, the failure to be notified of the “reason” for the
dismissal (which is a reason for the purposes of s.387(a) of the Act) is a neutral consideration
in this case as to whether or not the dismissal was harsh, unjust or unreasonable. This is
because there is no valid reason for the dismissal as the dismissal was for reasons unrelated to
Mr Maxwell’s capacity or conduct.
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Any unreasonable refusal by the employer to allow the person to have a support person
present to assist at any discussions relating to dismissal
[57] The Company did not unreasonably refuse to allow Mr Maxwell to have a support
person present to assist in any discussions relating to dismissal. The circumstances in which
the communication was conveyed did not allow for such a situation to emerge in which Mr
Toogood might have been placed in a position to determine the status of a support person.
This is a neutral matter in respect of whether or not the dismissal was harsh, unjust or
unreasonable.
If the dismissal related to unsatisfactory performance by the person—whether the
person had been warned about that unsatisfactory performance before the dismissal
[58] This is a neutral matter in respect of whether or not the dismissal was harsh, unjust or
unreasonable, given the circumstances referred to above.
The degree to which the size of the employer’s enterprise would be likely to impact on
the procedures followed in effecting the dismissal
The degree to which the absence of dedicated human resource management specialists
or expertise in the enterprise would be likely to impact on the procedures followed in
effecting the dismissal
[59] The size of the employer’s enterprise is not a relevant consideration, and nothing was
pressed upon me in that regard as mitigating the manner in which the redundancy decision
was communicated.
[60] However, the employer’s enterprise was without any dedicated human resource
expertise, and this deficiency, reasonably was relevant to the manner in which Mr Toogood
effected the dismissal, where expedition (to reduce operating costs quickly) trumped
consultation pursuant to the modern award clause.
Any other matters that the FWC considers relevant
[61] I have found earlier that I consider the reason for Mr Maxwell’s dismissal to have
been because of the operational circumstances facing the employer’s business. These
circumstances caused Mr Toogood to decide that the business no longer required the
administrative role performed by Mr Maxwell.
[62] Because Mr Maxwell’s dismissal arose from his position being made redundant, the
employer’s reasons for so acting towards Mr Maxwell were sound, defensible and well
founded.
[63] Mr Maxwell was not provided with a process of consultation as envisaged in the
modern award. He was informed his position was redundant and was dismissed in one
telephone conversation on 14 January 2015. In this regard, Mr Maxwell’s dismissal was
effected in a harsh manner.
Conclusion
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[64] Mr Maxwell was dismissed for operational reasons and these reasons were sound,
defensible and well founded. True it is that Mr Maxwell was not afforded any consultation in
relation to the definite decision as made by his employer to introduce a major change. He may
well have understood through the communiqué of 23 December 2014 that his employer was
in an operationally and commercially stressful phase of the business cycle (should he have
read it).
[65] But beyond that there had been no personalised communication with Mr Maxwell
about the threat to his own position in the context of the need for the employer to reduce its
overheads. Mr Maxwell was understandably aggrieved at the lack of notice and time to digest
the circumstances that had befallen him.
[66] But for all of that, given the specificity of the information conveyed to Mr Toogood by
the Santos representative on 7 January 2015 about the scale of the winding back of demand
for the employer’s services (and the consequential effect on the workforce in and around
Roma), any measure of consultation - even with the assistance of dedicated human resource
specialists - reasonably would have not affected the employer’s planning and the imperative
to reduce its overheads.
[67] Realistically, the absence of consultation with Mr Maxwell, while discomforting and
disconcerting after such a long period of employment, would have not changed the ultimate
outcome whatsoever: the employer was faced with dire forecasts about its business and it had
to act. The evidence as led in the proceedings makes out the fact that the forecasts have been
realised.
[68] In light of these findings, Mr Maxwell’s application under s.394 of the Act is therefore
dismissed.
SENIOR DEPUTY PRESIDENT
Appearances:
Mr N. Maxwell, Applicant
Mr I. Colgrave, of Counsel, for the Respondent
Hearing details:
Brisbane (and Adelaide by video)
2015
15 June
ORK COMMISSION AUSTRALIA THE SEAL OF FAIR
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