NNAYELUGO SAMUEL SAMPSON I BOSAH VS PIUS OJI
(2002) LCN/3274(SC)
In the Supreme Court of Nigeria
Friday, March 1, 2002
Case Number:SC. 175/1996
RATIO
LAND LAW: WHEN LEASEE WAS INDUCED BY LEASOR TO DEVELOP A PIECE OF LAND
Where a person has expended money on the land of another in the expectation, induced or encouraged, by the owner of the land that he would be allowed to remain in occupation thereof, an equity is created such that the court would protect his occupation of the land and the court has power to determine in what way the equity so arising could be satisfied- PER IGUH J.S.C
LAND LAW: WHEN DOES A LEASE BEGIN?
Where a contract for a lease is subject to the happening of an event, that contract becomes enforceable notwithstanding the fact that the commencement of the term is expressed by reference to the happening of an uncertain contingency provided that, at the time the contract is sought to be enforced, the contingency has occurred –PER IGUH J.S.C
JUSTICES:
SALIHU MODIBBO ALFA BELGORE JUSTICE, SUPREME COURT
IDRIS LEGBO KUTIGI JUSTICE, SUPREME COURT
ANTHONY IKECHUKWU IGUH JUSTICE, SUPREME COURT
ALOYSIUS IYORGYER KATSINA-ALU JUSTICE, SUPREME COURT
APPELLANTS
1. NNAYELUGO SAMUEL SAMPSON I BOSAH 2. AKUKALIA ALBERT BOBO BOSAH 3. PETER N. BOSAH 4. AUGUSTINE OSELOKE BOSAH (For themselves and as representing the family of Mr. Jerry O.Bosah – deceased)
RESPONDENTS
PIUS OJI
A. I. KATSINA-ALU JSC (Delivering the Judgment of the Court)
In this action on 29th April, 1863 Mr. Pius Oji the defendant and Nnayelugo Samuel Sampson 1 Bosah, Akukalia Albert Bobo Bosah, and Augustine Aseloka Bosah, the plaintiffs, came to an agreement which they put into writing. The object was that the defendant should take a lease of the premises known as No.49 Old market Road Onitsha for a term of 60 years. In the said lease agreement, Exhibit A, the defendant covenanted to demolish an old building at the back of the plaintiffs premises and build in its place a house containing 14 rooms for the use of the plaintiffs within one year. The defendant in addition was to pay the sum of £100 to the plaintiffs. Thereafter the defendant was to build for his own use another house in front of the premises and in addition pay the plaintiffs a sum of £980.
The defendant, after the completion of his own house, would obtain a certificate of occupancy from the Onitsha Local Council. The document (lease) said in clauses 7 and 8 “7 The term of sixty years will be counted from the time when the lessee obtains the certificate of occupancy for the building on the unbuilt area in front if he builds or if he chooses to convert it into a commercial use from the time he begins to make use of it.” 8. The defendant/lessee shall pay a sum of nine hundred and eighty pounds which if added to the one hundred pounds already paid as above will represent the three years rent in advance before he begins to build on the site or if for commercial purposes, before he begins to make use of the same.”
Exhibit A was dully registered at the Land Registy at Enugu. It must be pointed out from the outset that the defendant built a house of 14 rooms for the plaintiffs at the back of the premises within one year from the date of the execution or the lease as demanded by the plaintiffs. He also paid the initial £100. The plaintiffs went into occupation. But before he could muster enough funds to start the erection of his own house in front of the premises, the Nigeria Civil War broke out. Like everyone else, the defendant fled Onitsha. That result was that the defendant never went into occupation of the premises. After the cessation of hostilities, the parties returned to Onitsha.
The defendant met with the plaintiffs and intimated them that he was then ready and able to commence building work on his house in front of the premises. But the plaintiffs refused to go on with the lease to the defendant. The stalemate was on for quite some time. Then the plaintiffs brought this action against the defendant. They claim that the lease was not a binding or enforceable contract. The plaintiffs at Onitsha High Court claimed as follows under the Common Law procedure Act, 1852: 1. Possession of the premises upon a forfeiture for non payment of rent. 2. N15,640.00 rent or alternatively mense profits to the date of the service of the writ 3. Mense profits from the date of the service of the writ until delivery of possession. 4. IN THE ALTERNATIVE (i) Declaration that the said lease is void for uncertainty about its commencement (ii) Possession of the property comprised in the said lease.” The defendant in his statement of defence counter-claimed thus: “1. An order of court that the said Deed of Lease dated 29/4/63 and registered as No.14 at page 14 in volume 383 of the Deed Registry at Enugu is still subsisting, valid and effective. 2. An injunction restraining the plaintiffs, their servants, agents and privies or any persons whatsoever acting on their behalf from further interfering with the defendant’s rights under the said lease which rights include erecting a building in front of the premises known as No. 49 Old Market Road, Onitsha.” The learned trial judge after hearing evidence and after considering the authorities on the point dismissed the plaintiffs’ claim save as to the sum of N15,640.00 claimed as rent or mense profits.
He also ordered the defendant to pay the plaintiffs £980 (N1,960.00) as stipulated in the lease agreement Exhibit A. The learned trial Judge however gave judgment for the defendant in respect of his counter claim. Accordingly he ordered as follows: 1. That the said Deed of Lease dated 29/4/63 and registered as No.14 in Vol.383 of the Deeds Registry, at Enugu is still subsisting valid and effective. 2. An injunction to restrain the plaintiffs, their servants, agents and privies or any persons whatsoever acting on their behalf from further interfering with the defendant’s rights under the said lease which said rights include erecting a building in front of the premises known as No.49 Old Market Road, Onitsha.” The plaintiffs’ appeal to the Court of Appeal was dismissed. Hence this further appeal to this court. In this appeal, the plaintiff formulated three issues for determination. They read as follows: 1. Whether the learned Justices of the Court of Appeal were correct in upholding the decision of the learned trial Judge to the effect that Exhibit “A” – the Deed of lease – is valid and subsisting on the ground that its commencement date is certain. 2. Whether the learned Justices of the Court of Appeal were correct in holding that Section 210 of the Common Law Procedure Act 1852 did not avail the appellants’ claims for forfeiture so as to dispense with the requirement of service of Notice of breach of covenant of the Respondent, prior to the commencement of the suit. 3. Whether the 3rd issue for determination of the Respondent arose from the grounds of appeal. For his part, the defendant also raised three issues namely:- (a) Is the lease valid and subsisting? (b) Is the claim for forfeiture sustainable? (c) Whether the 3rd issue for determination as framed by the Respondent arose from the grounds of appeal. The main issue, in this appeal, for determination is whether the deed of lease (Exhibit A) signed by both parties is valid and subsisting. It is the case of the plaintiffs that the lease is not valid because the commencement date of the lease is uncertain.
As I have already shown the length of the term of the lease is certain. It is for 60 years. It is settled law that for a lease to be valid, the term of the lease as well as its date of commencement must be certain or capable of being ascertained. In the case of Harvey v. Pratt (1965) 2 ALL E.R 786 at 787, Lord Denning M. R. had this to say “It has been settled law for all my time that, in order to have valid agreement for a lease, it is essential that it should appear, either in express terms or by reference to some writings which would make it certain or by reasonable inference from the language used, on what day the term is to commence. In Marshall v. Berridge (1881 – 85) All E.R Rep. 908 at p.912 Lush L. J. said: “It is essential for the validity of the lease that something should appear either in express terms or by reference to some writing or some instrument, which would make it certain on what day the term is to commence. There must be a certain beginning and a certain ending, otherwise it is not a perfect lease, and a contract must, in order to satisfy the Statute of Frauds, contain this reference.” In Nlewedim v. Uduma (1995) 6 NWLR (Part 402) 383 at 396 this court per Belgore, JSC. held that: “A lease must be clear as to its intent and purpose and it must at least contain (i) the term of years (ii) the rent payable and (iii) commencement date of the lease.” From the decisions in the above cases it seems clear that if the date of commencement of the lease is certain or ascertainable from the document and its duration is also certain, then the lease is valid and enforceable. In the present case the duration of the lease Exhibit A is certain. Paragraph 1 thereof creates a sixty year (60) lease. The commencement date is provided for in clause 7 of Exhibit A. It states that: ‘the term of sixty years will be counted from the time when the lessee obtains the certificate of occupancy for the building on the unbuilt area in front if he builds or if he chooses to convert it into a commercial use from the time he begins to make use of it.” Although the date of commencement of the lease was not named therein, the date has been made certain by the contingency reserved therein. The result is this. The date of commencement is certain. And the duration of the term of the lease (Exhibit A) is also certain.
That being so Exhibit A is a valid lease. And it is subsisting. The plaintiffs have argued at pp. 9 and 10 of their Appellants’ brief of argument that: “If commencement of the lease is hinged on Respondent erecting a building or utilising the open space for commerce, it is clear that it is equally hinged on his capacity – financial or otherwise – to satisfy the contingencies. Where he is for any reason rendered incapable of satisfying such conditions, it is clear that the contingencies may never take place. The consequence of this is that from a construction of Exhibit A, the demised premises will remain encumbered for as long as the disability may last. Can it seriously be contended that when the parties agreed and executed Exhibit A, the lessors consciously elected to be bound by such an uncertain situation which would leave their reversionary interest entirely at the determination of the Respondent. Further as the rents may fall due when the term commences, that is to say, after the consequences reserved in clauses 7 and 8 of Exhibit A would have occurred, the Appellants will not have derived any rents from their premises until whenever the Respondent decides.” I must say that this argument is speculative.
It has overlooked the reality of the situation. The fact of the matter is that after the cessation of hostilities (Nigerian Civil War) the parties returned to Onitsha. The defendant approached the plaintiffs and intimated them of his readiness to commence work on the erection of the house. The plaintiffs would have none of that. They refused. This posture was confirmed by the plaintiffs in their evidence at the trial. The 2nd plaintiff testified as P.W 1. In his evidence under cross-examination he said: “I am not prepared to allow the defendant to come and erect the building lease in the premises now if he completes the agreed sum in the lease agreement.” The fourth plaintiff testified as P.W. 2. Under cross-examination he said: “I am not prepared to accept N1,960.00. I am not prepared to abide by the terms of Exh. ‘A’ any more.” I find it particularly plain from the evidence of the plaintiffs that it was the plaintiff who refuse to abide by the agreement, and chose rather to go to court. That apart, I think the plaintiffs gambled on the fact that it might or might not take some time for the defendant to erect the building in question.
I say this because in respect of their own building they stipulated a time frame. They gave the defendant one year within which to put up the building. The defendant complied and the plaintiffs occupied the same before the outbreak of’ the Nigerian Civil War. I believe the plaintiffs knew the probable consequences of not providing the time (period) within which the defendant should complete the second house which was tied to the commencement of the term of the lease. They cannot now be heard to complain. I come now to the issue of rent and mense profits. As I have already stated the defendant has not gone into occupation of the premises. The reason is clear. By clause 8 of Exhibit A it is only after the defendant had completed his building in front of the premises, and had obtained a certificate of occupancy from the Local Council that he would move in. Again by clause 8, the defendant would pay a sum of £980 before he commenced work on the building. No work has commenced yet on the building. This is because the plaintiffs refused to be bound by the lease agreement. Now the sum of £980 and the sum of £100 already paid by the defendant was to count for three months rent in advance. But rent would only fall due after the contingencies reserved in clauses 7 and 8 Exhibit A would have occurred.
The plaintiff appreciated this fact when in their brief they said: “Further as the rents may fall due when the term commences, that is to say, after the contingencies reserved in clauses 7 and 8 of Exhibit A would have occurred, the Appellants will not even derive rents from their premises, until whenever the Respondent decides.” Surely it must be seen that rent on the premises was not yet due. If follows therefore that at the stage when this action was brought the claim for rent was premature. A demand for rent does presuppose that rent was due. This is clearly not the case. Be that as it may, there is no appeal against the award of rent in the sum of N15,640.00 to the plaintiffs. I shall therefore say no more. In the result this appeal fails and I dismiss it. The plaintiffs’ claim is dismissed. I affirm the judgment of the court below. There shall be costs to the defendant which I assess at Nl0,000.00.
S. M. A. BELGORE, JSC: I find no merit in this appeal and for reasons contained in the judgment of Katsina Alu, JSC I also dismiss it with N10,000.00 costs to respondents.
I. L. KUTIGI, JSC: I read in advance the judgment just rendered by my learned brother Katsina-Alu, JSC. I agree with his reasoning and conclusions. I find no merit in the appeal. It is dismissed with N10,000.00 costs in favour of the Defendant/Respondent. The judgments of the two lower courts are affirmed.
ANTHONY I. IGUH, JSC: I have had the privilege of reading in draft the judgment just delivered by my learned brother, Katsina-Alu, JSC, and I agree entirely that this appeal is without merit and ought to be dismissed. The background facts leading to this appeal have been fully set out in the leading judgment and no useful purpose will be served by my recounting them all over again. I propose in this judgment to refer only to such facts as are directly relevant to the main issue in this appeal about which I desire to say a word or two of my own.
Without doubt, the central issue for determination in this appeal is whether the deed of Building Lease, Exhibit A, executed by both parties in respect of the premises known as No. 49, Old Market Road, Onitsha for a term of 60 years is valid and subsisting. There is a second and subsidiary question that flows from the main issue. This is whether even if exhibit A is void, this ipso facto deprives the respondent of all rights in and over the property in issue. It is the case for the plaintiffs that the lease is void for uncertainity with regard to the date of its commencement. The contention of their learned counsel, Dr. Onyechi Ikpeazu is that for a lease to be valid, its duration as well as the date of its commencement must be certain or capable of being ascertained. It was his submission that a term which stipulates that the commencement of the duration of lease shall be calculated from the date a certificate of occupancy is procured in respect of the building to be erected on the land is as bad as not fixing a commencement date at all. The position cannot be any different from where the condition is that the lease will commence when the lessee starts to utilize the demised premises for a commercial purpose. Dr. Onyechi Ikpeazu made reference to the decision of this court in Henrison Okechukwu v. Humphrey Onuorah (2000) 15 N.W.L.R. (Part 691) 597 (2001), 1 SCM 104 but stressed that the facts of that case are distinguishable from those of the present case. He finally submitted that the commencement date of Exhibit A being uncertain, the leasehold agreement cannot be valid or subsisting in law. The defendant, on the other hand, contended that the lease agreement, Exhibit A which was entered into and was duly executed by the parties voluntarily is valid and not void ab initio. It was submitted on his behalf that the said lease has a commencement date in future, the contingent event being the date the defendant obtains Certificate of Occupancy from the Onitsha Local Government in respect of a second building to be erected by him on the vacant portion of land in the frontal area of the demised premises or, if he chooses to convert the said area for commercial use, from the time he begins to make use of it. Learned counsel for the defendant, C. O. Anah Esq. also argued that the defendant whose operational activities on the demised land were interrupted by the Nigeria civil war between 1966-1970 did, in fulfillment of the lease agreement, complete the erection of the first 14 rooms decked apartment on the premises into which the plaintiffs, as agreed, went into immediate possession. When the defendant thereafter prepared to commence the erection of the second building for his own use under terms stipulated in Exhibit A, the Nigeria civil was started in 1966 as a result of which Onitsha was evacuated. The defendant returned to Onitsha PAGE| 6 at the cessation of hostilities to commence the erection of the second building but was stopped by the plaintiffs who claimed that Exhibit A did not favour them any longer. He argued that the defendant had always been ready to commence the erection of the second building in fulfillment of the lease agreement but was persistently frustrated in this venture by the plaintiffs. Learned counsel contended that the justice of the case, equity and fair play are all very much on the side of the defendant and that the validity of the lease cannot be questioned. The learned trial Judge at the conclusion of hearing was of the view that the lease, Exhibit A, is not valid for uncertainty. He said:- “In the instant case the maximum duration, is 60 years and so it is certain. The bone of contention is the commencement of the term. Clause 1 of Exhibit ‘A’ grants the lessee a term of 60 years. Clause 8 states that the term of 60 years will be counted from the building. It is in evidence that the building in front has not been built. It is only after the building has been completed and the Onitsha Urban County Council approves the building that the lessee can get a certificate of occupancy. …………. I therefore declare that the lease admitted as Exhibit ‘A’ is valid and subsisting. The commencement is ascertainable and the lease is for sixty years.” For its own part, the Court of Appeal in upholding the above view of the trial court put the matter thus:- “When it is said that the commencement date of a lease must be certain or capable of being made certain it need not be a fixed date or day, month and year. Its commencement may take effect on the happening of an event in the future. So long as the event on which the commencement of the lease is certain, the lease is valid and proper. In the case in the instant appeal, there is no difficulty with the certainty of the duration of the lease. It is for 60 years certain. The appellant however contends that the commencement date is uncertain… A Certificate of Occupancy takes effect from the date of its issue – see Finnih v. Imade (1992) N.W.L.R. (pt. 219) 511 at 553. In the alternative, if he does not want to put up any building in front, the lease shall begin to run as soon as the lessee begins to use the open space in front for commercial purposes after he had paid the N1,960. The commencement date or event for the lease to begin to run is therefore certain and crystal clear. I find no room for doubt, equivocation or argument on the certainty of the commencement date or event of the lease created by Exhibit A. The learned trial judge was therefore right when he declared the lease as valid and subsisting.” Clause 7 and 8 of Exhibit A which are relevant for the determination of the main issue in dispute in this appeal provide as follows:- “7. The term of sixty years will be counted from the time when the lessee obtains the certificate of occupancy for the building on the unbuilt area in front, if he builds, or if he chooses to convert it into a commercial use, from the time he begins to make use of it. 8. The defendant/lessee shall pay a sum of nine hundred and eighty pounds which if added to the one hundred pounds already paid as above will represent the three years’ rent in advance before he begins to build on the site or if for commercial purposes, before he begins to make use of the same.” It can thus be said that under the terms of Exhibit A, the term of sixty years therein reserved would start running from the date the certificate of occupancy in respect of the second building is issued by the Onitsha Local Government or, if the defendant chooses to convert the place into a commercial use, from the date he begins to make use of it. The real question in issue is whether the above stipulations can be said to indicate with any degree of certainty the commencement date of the lease. It is long settled that for an agreement for a lease to be valid, there must be, among other essentials, an agreement either in express terms or by reference from the language used on what day the term is to commence. In the absence of this, validity may not be given to such a leasehold agreement. So, in Harvey v. Pratt (1965) 2 All E.R. 786 C.A., the agreement for a lease did not contain any date on which the term should commence nor any facts from which the commencement date could be ascertained. The Court of Appeal (England) rightly held that the lease was not valid. Indeed, in order to have a valid agreement for a lease, both the commencement day and the maximum duration of the term must be either certain or capable of being rendered certain. See Lace v. Chandler (1944) K.B. 305 at 306-397. As Lush, L.J. put it as early of in the case of Marshall v. Berridge (1881) 19 Ch.D. 233 at 245:- “There must be a certain beginning and a certain ending, otherwise it is not a perfect lease, and a contract for a lease must, in order to satisfy the Statute of Frauds, contain those elements.” I must, however, quickly add that a lease for term of years, although, it must be for a definite period in the sense that it must have a certain beginning and a certain ending as aforesaid, this does not imply that the parties must immediately fix the exact date of commencement of the lease. The parties may agree that the lease shall commence upon the occurrence of an uncertain event, such as, upon the declaration of war by Great Britain or upon possession of the premises being vacant. See Swift v. Macbean (1942) 1 K.B. 375 and Brilliant v. Michaels (1945) 1 All E.R. 121. Where parties do in fact enter into such a bargain and intend to bind themselves on those terms, the agreement, though at first conditional, contingent and/or dependent upon the occurrence of an uncertain event becomes absolute and enforceable in law as soon as the stipulated event occurs. PAGE| 7 See Henrison Okechukwu v. Humphrey Onuorah (supra) at page 614, (2001) 1 SCM at Brilliant v. Michaels (supra) at page 126 and Cheshire and Burns Modern Law of Real Property by E. H. Burn (1982), 18th Edition Pages 368 – 369. Accordingly, where a contract for a lease is subject to the happening of an event, that contract becomes enforceable notwithstanding the fact that the commencement of the term is expressed by reference to the happening of an uncertain contingency provided that, at the time the contract is sought to be enforced, the contingency has occurred. To put it differently, where the date for the commencement of a lease is not specified but stated by reference to the happening of a contingency which is uncertain on point of time, until the contingency happens, there is no enforceable lease. See United Bank for Africa v. Tejumola & Sons Ltd. (1988) 2 N.W.L.R. (Part 79) 662 at 686 where this court per Obaseki, JSC. put it this way:- “It is settled by authorities that where a contract is subject to the happening of a contingency, that contract only becomes enforceable provided the event has occurred or the contingency has happened. Where a date for the commencement of a lease is not specified but stated by reference to the happening of a contingency which is uncertain in time, until the contingency happens, there is no enforceable lease.” See too Henrison Okechukwu v. Humphrey Onuora (supra) at Pages 614-615. Having examined the position of the general law on the issue under consideration, it is now left for me to ask myself whether or not clause 7 of Exhibit A which makes provision for uncertain contingencies that have not yet happened may be said to constitute a certain commencement day of the lease, Exhibit A as at the time of the institution of this action. With profound respect to the court below, I think not. It is at this stage that I must now turn to the equities of the lease. This must be so as a resolution of the validity of Exhibit A seems also to involve principles of equity which I will now proceed to consider. In this regard, the principle is well establish that where a person has expended money on the land of another in the expectation, induced or encouraged, by the owner of the land that he would be allowed to remain in occupation thereof, an equity is created such that the court would protect his occupation of the land and the court has power to determine in what way the equity so arising could be satisfied. So, in Ibadan City Council v. Ajanaku (1969) N.S.C.C. 44 at 49 where it was contended that the lease was void for uncertainty on the ground that it was for an indefinite term, this court held that the equity arising from the expenditure of money by the lessee would be satisfied by allowing the plaintiff and his successors to remain on the land for an indefinite period free of rent as agreed upon in the lease contended to be void. See, too, Inwards v. Baker (1965) 2 W..R.L. 212 where in similar circumstances Lord Denning, quite rightly in my view, commented:- “So, in this case, even though there is no building contract to grant any particular interest to the licensee, nevertheless, the court can look at the circumstances and see whether there is an equity arising out of the expenditure of money.” He went on: “All that is necessary is that the licensee should at the request or with the encouragement of the landlord have spent the money in the expectation of being allowed to stay there. If so, the court will not allow the expectation to be defeated where it will be inequitable to do so…” In the present case, the defendant with the agreement and concurrence of the plaintiffs expended his own money in the erection of a 14-rooms house in the expectation, induced and encouraged, by the plaintiffs that he would remain in occupation of part of the premises in issue for sixty years. I think the court in such circumstances, is bound to protect the equity created in favour of the defendant so that the same would not be unduly frustrated or defeated as the plaintiffs now appear to be doing. In that event, there is an equitable jurisdiction in the court to determine in what way the equity so arising could be satisfied. See Henrison Okechukwu v. Humphrey Onuorah (supra) at page 616. I think it is grossly inequitable for the plaintiffs to have induced and encouraged the defendant to commence and to complete the erection of a 14 rooms house at his own expense on the demised premises into which the said plaintiffs immediately moved on the understanding that the said defendant would develop and remain in occupation of part of the premises for 60 years but now turn round to refuse him entry into the said premises. It is therefore for the above reasons that I, too, find no substance in the appeal which I hereby dismiss with costs as assessed in the leading judgment.
UWAIFO, JSC: I have had the advantage of reading in advance the judgment of my learned brother Katsina-Alu JSC. I am in agreement with it that the appeal be dismissed. There is some troubling aspect upon which I intend to express my view. This is in respect of when the commencement date of a lease is expressed to take effect from the happening of an apparently uncertain event. The crucial issue in the present lease agreement executed in 1963 is whether the term of 60 years’ lease created by the agreement had a certain or ascertainable beginning. The facts of the case have been narrated in the leading judgment and I do not need to go over all of them. Clause 7 of the deed of lease provides for the term of years and the commencement (or likely commencement) thereof as follows: “The term of sixty years will be counted from the time when the lessee obtains the certificate of occupancy for the building on the unbuilt area in front if he builds or if he chooses to convert it into a commercial use from the time he begins to make use of it” PAGE| 8 [Emphasis mine] As can be seen, two alternative conditions for ascertaining the commencement date of the lease are stated in clause 7. They are (a) when the lessee obtains a certificate of occupancy for building if he chooses to build, or (b) if he chooses to convert the land to commercial use from the time he begins to make use of it. I do not think that there is any argument that the commencement date depends on wholly uncertain contingencies lying entirely with the defendant and his ability or disposition to take the necessary steps. The principle for a valid lease is that it must be clear that there was an intention to create a term of years with a certain beginning and a certain ending. In that regard, the essential terms upon which there must be evidence are as to: (1) who the parties are; (2) what is the extent or nature of the property; (3) the
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