Attendees
Tax Court of Canada (TCC)
- The Honourable Eugene Rossiter Chief Justice
- The Honourable Lucie Lamarre Associate Chief Justice
Courts Administration Service (CAS)
- Francine Côté (FC) (Interim) Chief Administrator
- Cristina Damiani (CD) Executive Director & General Counsel
- Sophie Matte (SM) Executive Legal Counsel
- Donald MacNeil (DM) Registrar
- Joel Kom Legal Counsel
Justice Canada (DOJ)
- Shalene Curtis-Micallef (SCM) Assistant Deputy Minister, Tax Law Services Portfolio
- Daniel Bourgeois (DB) Deputy Assistant Deputy Minister
Canadian Bar Association (CBA)
- Neil Bass (NB) Aird Berlis LLP (Toronto)
- Jehad Haymour (JH) Bennett Jones LLP (Calgary)
- Mark Tonkovich (MT) Blake, Cassels & Graydon LLP (Toronto)
- Nathalie Goyette (NG) – Committee Chair Davies Ward Phillips & Vineberg LLP (Montreal)
- Timothy Fitzsimmons (TF) PwC Law LLP (Toronto)
- Tamra L. Thomson (TLT) - CBA – Executive Director, Advocacy
I. Welcomes and approval of agenda
A. Approval of minutes of the December 1, 2019 meeting.
- After some discussion, it was determined that the minutes of the December 1, 2019 meeting would be commented upon and approved by email.
II. What’s new at the tax court of Canada (“TCC” or “Court”)
A. Impact of COVID-19 on operations
- The Chief Justice advised the Committee as to the impact of COVID-19 on the TCC's operations.
- The Court reopened on June 22, 2020. Since late June, 100% of the Court's staff have returned at the Court's Ottawa location, as well as in Toronto and Hamilton. The Court has tried to operate at full-basis with staff, but there have been daily human resources and operational COVID-19-related issues.
- For all TCC facilities, CAS has put in place health and safety measures such as social distancing, room limits/numbers, wearing masks, increased hand washing, sanitization, monitoring, cleaning of courtrooms between hearings, etc.
- Responding to pressure from both the public and private bars, the Court pushed very hard at the front end to reopen facilities and schedule hearings. Starting in July, August, and early September, appellants were called in the priority of adjournment and given two choices: 1) attend their hearing on a proposed date, or 2) be put at the back of the scheduling queue. In some jurisdictions, over 50% (80% in one area) opted to put their case to the back of the queue. In another jurisdiction, there was a 68% failure to return court staff's telephone calls, even though staff called on two occasions.
- The Court has sat consistently in Vancouver, Calgary, Edmonton, Toronto-Hamilton, Montreal, Ottawa, Quebec City, and Halifax. It has also held sittings on an emergency basis in several cities (e.g. Saskatoon, Lindsay and Moncton).
- In its November 26, 2020 Notice to the Public and Profession, the Court announced the cancellation of sittings for November 30, 2020 through January 15, 2021(the “current cancellation”) at all sitting locations across Canada for in-person sittings, with very few exceptions. In line with the thinking of Canadian health authorities, the current cancellation was done because as time progressed, the Court became more concerned about the health and safety of the parties, the public, the court staff and the judiciary.
- During the current cancellation, all proceedings that have been scheduled and that are not set to be heard in-person will continue. This includes show cause and case management hearings (which will be done by conference call/videoconference).
- The Court will monitor the continuing situation and will reassess matters the week of January 4, 2021.
- Unless intervening events occur, Court sittings will resume on January 18, 2021 with the docket as presently fixed, and the week of January 25th will be the same.
- Cases adjourned that call for in-person sittings will be rescheduled as and when possible. Parties have to be mindful that the Court does not have the time and resources to engage in multiple communications regarding rescheduling.
- The Court is constantly reassessing its approach concerning hearings. The Court wants to proceed with virtual hearings at the earliest opportunity and is open to experimenting with procedures remotely, but there has to be a realistic understanding of where the Court is at. In this regard, the Court has contacted Chief Justices of superior courts across the country and the situation of these courts, who have received funding to improve their technology, are dramatically different than the Court’s in a number of ways.
- Years of lack of funding have led to a lack of the proper infrastructure needed to maintain the Court's mandate to be an itinerant court and provide service for all Canadians.
- The Court got WiFi for the first time during the week of November 17, 2020.
- There are other IT issues such as Court needing more stable connectivity and more internet bandwidth. CAS has stated that it will give priority to this issue.
- The backroom resources needed to operate a trial remotely are massive. The Court does not hear matters where most of the evidence is presented through affidavits. Rather, most of the evidence before the Court is introduced by witnesses.
- The TCC is not yet digitized. Accordingly, files must be shipped to a hearing location days in advance and delays in hearings may arise when materials are filed at the last minute. These logistical impediments will be eliminated and files will be available to Judges and CAS staff across Canada when the Court will have 100% of its active files digitized. This should be the case by April 30, 2021.
- The Court has e-court capabilities, and is trying to ramp these up.
- In this context:
- The Court has had some hybrid in-person/virtual hearings with witnesses who testified virtually for various reasons, including being out-of-country or in quarantine.
- The Court cannot realistically foresee having virtual hearings for lay litigants or long trials in the near future.
- However, the Court is looking at virtual trials for one-day/two-day appeals, but that is probably the maximum possible in the near future unless the Court gets greater bandwidth, technology and sufficient trained staff.
B. Resignations, Appointments and Vacancies
- The Chief Justice advised that there are no resignations to report, and no vacancies or positions to be filled. The Court does have a request to the DOJ and the Department of Finance for three additional judicial positions, to bring the Court's complement up to 25. There has been no change to the complement of the TCC in the last 30+ years. Further, the Court will be down to one supernumerary as of April 30, 2021. All of this affects the Court's complement and operations.
C. Statistics and Trends / Current Inventory
- The Chief Justice explained that the Court’s inventory level as of November 2020 is at the exact same place it was in November 2019. The applications/appeals for 2020 are down 48%, and dispositions are also down 48%. The Court believes that there may be three explanations for this situation related to the COVID-19 pandemic:
- First, the Court effectively closed for three months, and there was no activity during that time.
- Second, the practice of law having been seemingly shut down for 4-5 months combined with the extension to September 2020 of the period of time for filing purposes pushed actual dates for court filings out even more.
- Third, it appears that the Canada Revenue Agency (“CRA”) was not issuing assessments/reduced significantly its assessments and reassessments operations.
- SMC explained that the CRA was administering benefit programs for Canadian individuals and businesses, and so they redeployed a lot of their people to that. The CRA is also sensitive to the fact that many businesses are suffering, and so it is not prioritizing audits of small and medium businesses. Further, the CRA is bringing more audits online now, but some national organizations have expressed concern about that. As the Chief Justice noted, fewer assessments are being issued and fewer objections being confirmed this year.
- In light of the above, the Chief Justice anticipates there will be a spike of appeals in 2021 and 2022 and beyond, especially concerning government assistance initiatives that have been rolled out. The possible issuance by CRA of automatic assessments for some taxpayers without requiring them to file returns could also lead to increased objections. This has been the case in countries that have proceeded with automatic assessments.
D. Regional Matters / Issues
- The Chief Justice advised the Committee on the following regional matters.
- Public Works are still in the planning stage for the proposed new court building in Montreal.
- The plan remains to expand court facilities in Toronto. If the funding for Toronto is provided, the Court plans to have a minimum of six judges in Toronto every week, as Toronto is the current epicenter of work. If the Court gets prothonotaries, one will sit in Toronto and the TCC will have eight courtrooms available every week.
- The current temporary Court facilities in Hamilton are small. A Request for Proposals has gone out for a new, larger facility for the Hamilton area.
- Renovations to the Calgary facilities have been completed.
- The remaining CAS facilities across the country are fairly well set up as they are, although for clarity: the Court does not foresee sitting in these facilities and sitting in non-CAS facilities until there is a significant change in the COVID-19 environment.
E. Preliminary Ruling Docket and Fast-Track Settlement Conferences
- At NG’s request, the Chief Justice reported on the Preliminary Ruling Docket pilot project.
- This pilot project was brought in around January 2020. Two cases were scheduled, but only one proceeded, and that was in the fall of 2020. From the sitting judge’s perspective, the process was successful.
- The Court will continue with this initiative for some time after the pandemic effort.
- The Court advised that the fast-track settlement conference process, which was suggested by the private bar, has had a disappointing uptake. This initiative requires agreement between the Crown and appellant's counsel and there seems to be a blockage. The few fast-track settlements that the Court has had have been very successful.
- The Court would like to see the private bar and the Crown become more comfortable with having temporary practices available to them to help them deal with litigation.
F. Other Issues
- There are no other issues.
III. Courts administration service
A. Update from CAS
- FC is the Interim Chief Administrator as Daniel Gosselin has retired and there were other departures.
- FC reported that CAS is seeking funding for 200 Kent Street (Ottawa) and Toronto expansions, as well as relocation projects in Winnipeg, Hamilton and Halifax.
- CAS has many IT projects, especially in the COVID-19 context – including bandwidth, equipment and software – to support the Courts, staff and e-filing. IT has been a challenge for CAS, the result of a lack of funding, but also a lack of resources – both in human resources and IT bandwidth. These issues are throughout the federal government.
- CAS is increasing its equipment to allow for bandwidth expansion.
- The HR part remains of high concern: with everyone relying on technology, it is difficult for CAS to retain its IT personnel, so it is constantly in staffing talks to deal with IT-specific HR issues. CAS is also dealing with contractors.
- Despite some IT advancements (e.g. new WIFI, virtual hearings, etc.), things are not perfect. In this regard, virtual hearings require an additional person to deal with the technology aspect of the hearing.
- In terms of CRMS, CAS is progressing: COVID has extended timelines but the RFP will be posted soon. CAS wants a prototype so the system can be tested first. CAS is counting on judges and judicial officers to help identify the best CRMS solution.
- COVID-19 has been very challenging for CAS. Unlike other government agencies where personnel can mostly work from home, CAS must support its courts, be there in person, and support the public. CAS has good measures in place, and these have been verified by public health authorities and relevant government authorities, as well as by private sector specialists. Ventilation in all CAS buildings has been looked at in the context of COVID-19.
IV. TCC rules committee
A. Update from Rules Committee
- SM reported that there has not been very much progress on the Rules. As the Chief Justice explained, the Court has been busy maintaining its operations in the COVID-19 context. There has been no Rules Committee meeting since spring 2019. As mentioned at the last Bench & Bar Committee meeting, the Court is looking at rules concerning agents, group appeals, costs, and other topics that will be discussed at the next meeting.
- Some progress has been made, however, on amendments to the General Procedure rules. The Court received a final draft of those Rules from the DOJ just before the pandemic hit. The Court has not yet had a chance to advise on the final draft and refer same to the Rules Committee, but it will do so soon.
- The Chief Justice added that the Court has had three internal TCC committees established to look at the following: group appeals; case management; possible amendments to the Tax Court of Canada Act, Income Tax Act, and Excise Tax Act (procedural potential amendments rather than substantive amendments). The Court is also looking at the issue of costs and how they play out in appeals.
- The Rules Committee will look at how to be more effective with group appeals and Rule 174.
- The Court is also reviewing the case management rule.
- In terms of agents, the Court is examining the possibility of developing a rule that would define who could act as an agent before the TCC, and provide some training for agents: two or three-day course in several cities in Canada (Montreal, Toronto, Calgary, and Vancouver).
- The TCC's Statutes Committee will be putting forward comments for the DOJ concerning statutory provisions that deal with a number of issues that the Court is confronted with on a regular basis. It will be for the DOJ to look at this.
Last Minute Settlements / Consent Judgments
- The Court has an important loss of court time due to settlements and consent judgments at the last minute. While settlements and consent judgments per se are not problematic, last minute ones impact the effective and efficient allocation and use of the Court’s resources.
- In respect of last minute settlements, NB raised the fact that in Informal Procedure (“IP”) appeals, litigants are given 30 days' notice of TCC hearing, but DOJ counsel are not assigned the file early enough to allow them to properly engage in settlement discussions prior to the hearing. In this context, a CBA member asked whether consideration could be given to the Court giving 60 days’ notice for IP hearings.
- The Chief Justice responded that the 30 days' notice for IP appeals and DOJ being provided with CRA’s files late in the process are not new facts. However, the issue described above may have been exacerbated by virtue of the new “work from home” reality with COVID-19.
- DB explained that things have improved over the past year thanks to a portal that allows CRA’s files to be sent to DOJ electronically. Counsel now receive the files within 20 days from service of the notice of appeal. Some CRA offices will hold on to IP files to see if they can settle before they come to DOJ. In those circumstances, DOJ counsel may have received the file at the last minute and this could explain the situations reported to NB.
Summary Judgment Rule
- MT suggested that TCC litigation might benefit from a procedure similar to the summary judgment procedures found in other courts. While rule 58 is important, and certain other TCC rules offer their own pros/cons, the corresponding procedural requirements can be cumbersome. In any event, the existing rules do not appear to achieve the simplicity or the results that might be achieved by summary judgment processes in other courts (e.g. proceeding on affidavit evidence, with out-of-court cross-examinations, and then focusing hearings on oral arguments, etc.). MT asked if the Court or the Rules Committee previously considered the possibility of instituting a summary judgment rule/procedure in the TCC and, if this possibility has previously been rejected, might now be a good opportunity to revisit the idea (both during and post-pandemic).
- The Chief Justice responded that the Court has looked at the possibility of having summary judgments before and will pursue this topic again. The TCC’s Statutes Committee is looking at particular provisions in the Tax Court of Canada Act to deal with summary judgments and some related matters and perhaps there will be developments in this regard in the next six to twelve months.
V. Issues raised by Justice Canada
- DB led the Committee through a discussion of the issues raised by the DOJ which are described in bold in the paragraphs below.
A. Setting Down Hearings
Upon resumption of Court activities in mid-July, the TCC has started the practice of setting down hearings after having canvassed the availability of the Appellant but without communicating with Crown counsel. This was unexpected in light of the discussions of this Committee prior to the resumption of Court activities. In our view, if it is necessary for the hearings coordinators to speak to the appellant regarding their availability, both parties should have an opportunity to speak to the hearings coordinator before a hearing is set down.
- The Chief Justice explained that the Court has limited resources to reschedule hearings and that the public remains the priority. Further, the Court communicated this scheduling method prior to implementing it. The Court understands that this method can be frustrating, but the Chief Justice stated that judges and DOJ counsel have a responsibility to the public and that this is an exceptional context we are operating under.
- DB mentioned that DOJ counsel had not understood that the TCC would not be calling them in scheduling, but added that DOJ counsel are working very hard to meet scheduling and there have been very few adjournments requested.
- The Chief Justice advised that during this pandemic, the DOJ lawyers' union directly raised employment issues with CAS and the Court. The Court deems that these issues are not issues for CAS or the TCC to address.
- SCM mentioned that the DOJ wrote to the Court early in the pandemic with respect to quarantining when moving in/out of the Atlantic Bubble. This was done not with a view to preventing those particular hearings from going ahead, but rather to deal specifically with that quarantining issue. Once the issue was raised with the TCC and the Court advised of its position, DOJ acted accordingly and reallocated files if required and has not made many requests for adjournments. SCM further mentioned that the DOJ agrees with the Chief Justice that it is not for CAS or the TCC to address the employment issues raised by the DOJ lawyers’ union.
- The Chief Justice clarified that the DOJ does not request many adjournments. Those requests are not frequent and are almost always for legitimate reasons.
B. Virtual Hearings
Will the TCC revisit its approach to allowing virtual hearings, or permitting oral evidence to be adduced remotely, especially in light of increased use of these processes by other courts?
- DB communicated that in addition to the prior discussion about virtual hearings, one shouldn’t assume that all IP hearings are not appropriate for virtual hearings. IP litigants have expressed the desire to having IP hearings virtually, thus having their day in court. In the context of the pandemic, some IP litigants would prefer not to show up at an in-person hearing.
- NG mentioned that it has been heard that if lay litigants can FaceTime with their family, they can do virtual hearings as well. She added that in her opinion, the issue may have to do with accessing court documents.
- The Chief Justice responded that there are a number of challenges with virtual hearings. For virtual hearings, documentation, presenting evidence is one thing, but also the issue of individual set-ups, understanding of rules and expectations when one is not on-site (for example, who can be present, etc.). Several other particular issues arise for lay litigants. For the TCC, one has to also take into account the additional challenges that this can have in a context where many before the Court are lay litigants. The Court will look into this option for lay litigants on an individual case basis, and will not disenfranchise anyone. The Court will make sure that taxpayers have their hearing as expeditiously as possible and look at all options realistically viable to do so at this time.
C. Remote Commissioning of Affidavits
Our understanding is that the TCC has been authorizing remote commissioning of affidavits upon request. Would the Court agree to put out a COVID-specific practice directive permitting remote commissioning of affidavits during the pandemic?
- The Chief Justice answered affirmatively and added that the Court will have something in the next weeks on this. It was already a work-in-progress when the question was put forward to the Court.
D. Identification of Method of Examination for Discovery
Will the TCC consider modifying its requirement that parties must identify their method of examination for discovery (oral or in writing) in their joint timetable, before exchanging lists of documents. Counsel feel that it is the disclosure of information through the list of documents that allows them to make an informed decision about which method is most efficient. Providing this flexibility would allow the parties to choose the most cost-efficient approach without the need to engage the Court.
- The Chief Justice first noted that this was an issue pre-pandemic as well. The problem with this issue is that it often ends up extending the period of litigation. The Court suggests that parties write to the Court if they change their mind about the method of examination they want.
- MT noted that, over the years, in several files, he has prepared joint timetables that set specific timelines for both alternatives in a single document. MT does not recall the Court ever taking issue with those proposals, and the TCC judges reviewing the proposals have generally ordered the two-pronged schedule as proposed. The Associate Chief Justice added that other counsel follow this method.
- The Chief Justice ended the discussion by stating that this topic will be discussed internally, and the Court will come back to the Committee.
VI. Issues raised by CBA members
- NG led the Committee through a discussion of the issues raised by CBA members which are described in bold in the paragraphs below.
A. Impact of the Rybakov decision (2019 TCC 209 confirmed by 2020 FCA 169)
In Rybakov, both the Tax Court and the Federal Court of Appeal concluded that an amended appeal under paragraph 302(b) of the Excise Tax Act results in the institution of a new appeal. One CBA member expressed the concern that the decision could have serious repercussions such as being assigned a new court file number for the new appeal, having to pay a new filing fee, filing a new list of documents, holding new discoveries, etc. The member would like the Court’s consideration of this issue and, if warranted, a review of the repercussions by the Rules Committee.
- In responding, the Chief Justice noted that paragraph 302(b) of the Excise Tax Act provides “…the person may… where an appeal has already been instituted in respect of the matter, amend the appeal by joining thereto an appeal in respect of the reassessment or additional assessment in such manner and on such terms as the Tax Court directs.” Thus the statute permits the Court to control the process and decide, on a case-by-case basis, whether a new court number or filing fees are required. Accordingly, there is no need to change the rules to address this issue.
B. Impact of the Sarmadi (2017 FCA 131) and Eisbrenner/Morrison decisions (2018 TCC 220 confirmed by 2020 FCA 93, application for leave to appeal filed on October 23, 2020)
A CBA member expressed the concern that the above decisions are changing the law and will have an impact on how pleadings are drafted and used. In the member’s opinion, prior to these decisions, it was understood that a taxpayer had the burden of proof with respect to the assumptions pleaded by the Minister in the Reply. In Sarmadi and Eisbrenner/Morrison, it was ruled that a taxpayer also has the burden to prove the facts alleged in the Notice of Appeal and denied in the Reply. The member anticipates that, as a result, taxpayers are likely to include minimum facts in the Notice of Appeal, take note of the assumptions in the Reply and, when appropriate, allege additional facts in the Answer. Given that the Supreme Court has been asked to address the issue of burden of proof, it makes sense for the TCC to await the Supreme Court’s decision. However, should leave to appeal be denied, or should the Supreme Court confirm the TCC and FCA decisions, the member would be grateful if the Court and its Rules Committee review the rules regarding pleadings.
- The Chief Justice answered that because the matter is now before the Supreme Court, it is best not to comment. However, the Court noted that in General Procedure appeals, all material facts to be relied upon have to be pleaded in the Notice of Appeal. Thus, regardless of the burden of proof, the appellant faces potential action from the respondent if it fails to plead all relevant facts (e.g. a strikeout). The Court will consider this matter along with the result from the Supreme Court.
C. Preliminary ruling docket
While appreciating that the pandemic has impacted the TCC’s operations, a member asked if the TCC has anything to report on the pilot project. The member suggested that the process could be more efficient if parties agreed to be bound by the preliminary decision.
- The Chief Justice stated that in addition to the comments above made on this initiative, the problem with requiring parties to agree to be bound by a preliminary ruling is that this means it is no longer a preliminary ruling, but a final ruling. As such, the Court does not think this would work.
D. Tariff
The issue of the adequacy of the tariff was raised again. The member acknowledged the tariff must not deny access to justice by precluding taxpayers from filing appeals out of fear of having to pay hefty costs. That said, the member suggested that a new class be created for proceedings with a considerable amount of tax in issue, where the tariff is unlikely to hinder filing an appeal.
- The Chief Justice explained that the problem is finding a balance between the positions of the DOJ and the private bar on this issue. The Court has looked at all the different costs regimes across Canada, including different tranches for different types of cases and slotting appeals into different categories and did not find one method that could resolve the issue of costs better than keeping the discretion with the trial judge. The Court is comfortable with discretion being kept in the trial judge’s hands at this time.
E. Rule designed to deter late settlements
One member has reflected on the Chief Justice’s comments expressed at the Canadian Tax Conference on a rule designed to deter late settlements. The member suggested one way to achieve this result would be to ask parties to deposit money with the TCC prior to the hearing. For instance, a rule could provide that parties must deposit a certain amount of money 60 days prior to the hearing. If there were no settlement, the amount would be refunded to the parties and the rules on costs would apply. If the parties settled within 60 days of the trial, they would both lose their deposit. The member suggested that the rule be limited to appeals scheduled to last more than one day.
- The Chief Justice found that the member’s suggestion is a novel idea. The Court’s concern with the suggested rule is where the deposited money would go. The deposit cannot go to the Court. There was some discussion previously of the creation of a trust fund, but this has yet to be approved by the government. The suggestion will be considered further.
F. Rule 58
Many comments casually expressed a concern with recent case law on Rule 58. In a formal note, one member highlighted that the Federal Court of Appeal, when asked to rule on the correctness of a decision rendered on a Rule 58 question, challenged the question itself and whether it was a proper question. There seems to be a consensus among practitioners that, where the parties and the TCC agree that a question may dispose of all or part of the proceeding or result in a substantially shorter hearing or a substantial saving of costs, a higher court should not interfere as to whether the question is a proper one. In other words, where the parties and the TCC agree that the answer to a question will govern their conduct, there is no reason to decide otherwise. In this context, the member noted that Rule 58(2) could be amended to say the TCC has “discretion to grant an order if it is of the view that determination of the question before the hearing may dispose of all or part of the proceeding or result in a substantially shorter hearing or a substantial saving of costs”. Use of the word “discretion” would signal to higher courts that they should not interfere with the TCC’s right to manage its process.
- The Chief Justice does not believe that adding the word "discretion" will make a difference. The Court will continue using Rule 58 since it is designed to use time and resources more efficiently.
G. Virtual hearings
Many comments were received on virtual hearings. There seems to be a general desire to use videoconferences to the greatest degree possible to move appeals forward without having to attend in person. Members appreciate that certain situations, such as informal procedure appeals or those raising a credibility issue, may not be appropriate for virtual hearings.
However, for situations where virtual hearings are appropriate, many suggestions were received as to how to proceed. At the request of the chair of this committee, Mary Paterson, a partner at Osler, Hoskin & Harcourt LLP, put together a collection of best practices and tips on the use of videoconferences for judicial hearings. Ms. Paterson’s document was circulated to those attending this meeting.
- The Court has no comments to add to the preceding discussion on virtual hearings.
H. TCC’s new website
One member commended the TCC’s new website. However, the member noted that most appellants are now designated as self-represented.
- The Chief Justice advised that the Court will follow up on this point. TCC note: This was corrected in November.
VII. Other business
- NB commended the Court for how the process and procedures were carried out during in-person hearings during the intervening (pandemic) period. It is hard to say this during an actual hearing, so perhaps these comments can be passed on to the judges who have sat through these proceedings.
- The Court appreciated the feedback.
VIII. Next meeting
A. Date and Location
- The possibility of formally scheduling the next regular meeting of the Committee was discussed. The Chief Justice advised that the Committee will likely have our next meeting sooner rather than later, and will not wait the usual six months. At the same time, if the Committee would like a meeting at any point, NG should contact the Court for a meeting to be scheduled. The Court will do the same.
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