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The ofямБcial newsletter of Unit Owners Association QLD





New Adventures of Lottie Page 4

Caretaking Agreement -VPage 7

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EST. 1968

Quick News From the Editor

We have our first good news story to announce with 1 large building should receive $80,000.00 extra over the next year for the higher interest deposit system recently introduced called “cash flow management”. The number of responses to the free report in July edition has been very encouraging. The smaller schemes are also showing positive results with a 15- 25 lots scheme showing a net return of over $1,500.00 after fees. Unit Owners Assocation QLD 6th Floor. 333 Adelaide St, Brisbane Q 4000 E P 3220 0959


P 3220 0959 or and request to communicate to a particular person Sue Ekert, Bob Boundy, Elle Young, Paul Cassels. Published by Unit Owners Association QLD Editor Paul Cassels

Gold Coast

Wayne Stevens, Greg Carroll, Roger Dearing

Art Direction

Dan Hancock - P 3162 8823 E

Web Development

John Connole - P 0439 879 740 E


We appreciate the support of our sponsors to help us do the work we do. To become a sponsor of UOAQ, please contact Paul Cassels on 3220 0959

CTS Management Suite 35, Level 6. “Northpoint” 231 North Quay Brisbane QLD 4000 Telephone 07 3211 4445 Fax 07 3211 4410 Mobile 0419 741 066 Email

Paul Cassels

This has prompted the committee of the UOAQ to introduce the Building Member category for the first time. The AGM vote was Yes for the building membership change. Disaster preparation is vital to your survival. Please follow the link at the bottom of the article to understand if you are ready, please give it a go. This is an important initiative by volunteering QLD and has a section on units in the Million star challenge. Members are requesting some coverage for the practice of extending Management Rights Contracts and want to publish their buildings names and dates of the EGM’s and AGM where this is occurring. See this web site for more info I found an interesting reference in a recent article which should be challenged in Queensland, just as it was successfully challenged in NSW

I quote: “That is, management rights are never the developer’s to sell. By a circuitous route, this is the policy that a successful breach of fiduciary duty case implements. In Arrow’s case, by forcing the developer to disgorge the profit it made in the sale of management rights, the court was reallocating money to the entity which should have made the profit in the first place - the collective body of owners.” 1 The reference is to Community Association DP No. 270180 v. Arrow Asset Management Pty Ltd &Ors [2007] NSWSC 527, in which the NSW Supreme Court ordered a developer who sol d management rights to hand over the proceeds of the sale to the Owners Association, due to a breach of fiduciary duty that the developer owed to the Owners Association.


Coralie Mott

(BA Dip Ed, Cert IV in BCM)


Director and Body Corporate Manager



Unit Owners Association QLD

Help for Members

Members of the UOAQ are welcome to contact committee members of the association for any help on any body corporate matter.


Articles contributed to this newsletter are published as a service to members and do not necessarily reflect the opinion or policy of this Association. To contact the committee of the UOAQ for assistance with a body corporate matter please e-mail


UnitNews Online October 2011

Graphic Design, Branding and Identity


Quick News Many Unit Owner ratepayers do not know what Differential Rating is or how it impacts on them. This statement will try to explain. The GCCC provides the following description: “Differential General Rates” A differential system of rates provides equity through recognising capacity to pay, level of services required, use of the property and the final impact on ratepayers.”

This is the simple way of describing the GOLD COAST CITY COUNCIL’s (GCCC’s) rating of units above the 4th level. The higher the floor, the greater the council rates that owners are charged. The GCCC describe it as “DIFFERENTIAL RATING”. Owners see it as a rate for the view.



• • •

The categories listed in the GCCC Revenue Statement and Resolution of Rates and Charges 2011-12, impose increased rates on apartments the higher the apartment is in a building. The council assumes that the higher an owner lives in a building, the greater their capacity to pay, or the greater their wealth. The council has determined that capacity to pay and wealth of the owner should determine the rates that an owner pays, and that all people who live in high rise apartments are wealthy, with a greater capacity to pay. Nothing is further from the truth. There are numerous reasons why people move to high density life style, not the least being the encouragement of State Government policies. There was a community perception that as strata schemes shared lifestyle and infrastructure, it led to shared costs and reduced living expenses. Councils by introducing Differential Rating, saw unit owners as easy targets, providing the Council with massive financial rewards to the detriment of economies of scale and discouragement of the State Government’s SEQ regional plan. Should the State Government want to maintain the integrity of its regional plan and avoid developing ever increasing infrastructure, it must support the abolition of Differential Rating, and restore the confidence that economies of scale will be fully secured to unit owners. The impact of Differential Rating is outlined in the attached statement but can be best

Financial aspects of improvements and major projects Office bearers insurance Sinking fund forecasts

4th level apartment $150,000 @ .5220 Rate = $ 783.00 5th level apartment $150,000 @ .7843 Rate = $1,176.45 11th level apartment $150,000 @ .8519 Rate = $1,277.85 21st level apartment $150,000 @ .9204 Rate = $1,380.60 41st level apartment $150,000 @ .9880 Rate = $1,482.00

The above statement demonstrates that an owner on the 21st level is charged an additional $603.60p.a. An owner on the 41st level is charged an additional $699.00 p.a, compared to an owner that lives below the 4th level. All apartments would require similar council services and the use of all apartments could be the same. The impact on the owner living on the 41st floor, is that they are charged additional rates of $699.00p.a. The UOAQ believes that in this time of hardship, inequities of this kind  should be forcefully opposed, and calls on  all unit owners who live on or above the 4th   level to support the abolition of this unfair    rating regime. Contact your local councillor   and urge them to support this cause or      lose your vote at the forthcoming council     elections. Visit  

  


              


         

 • The Neighbourhood Disputes Act    • Painting your building made easy    • Open session   

       


GOLD COAST COME & JOIN US Thursday 20 Oct 2011

And bring a friend 

Coorparoo Bowls Club 32 Riddings St, Coorparoo

Southport Yacht Club Compass Room, Macarthur Parade, Main E

5:30pm Registration 6pm - 9pm Speakers

9am Registration 9:30am - 12:30pm Speakers

Seating is limited so book early by registering your interest now  at or by phoning Danni Hanns on  07 3622 3944

Monday 17 Oct 2011


demonstrated by comparing the rates of a 2 bedroom apartment on selected higher floors. The 2 bedroom apartments will all be equal in size, and for the sake of this demonstration will each have a UCV of $150,000. (UCV valuations are apportioned on the basis of “Interest Lot Entitlement” that normally increases with height increases, increasing rate exposure even further)

 | | 1300 55 10 19

October 2011 UnitNews Online


UOAQ - Become a Member Today! The Scary Adventures of Little Lottie, The Lot Owner A modern Fairytale

“The Mystery of the Vanishing Capital Value” Little Lottie lived in a faraway kingdom which was beautiful one day and perfect the next. Some years before, when Lottie had bought a little apartment, she had been warned that she would be expected to regularly pay levies which contributed to the maintenance, repair and improvement of the common areas which Lottie shared with the other lot owners. Lottie thought that was very sensible. Eventually, Lottie noticed something very peculiar. The levies kept increasing (as did all the other utility bills) and Lottie found it difficult to balance her budget. Lottie decided to investigate. Lottie made some simple calculations

Everything Covered?

and quickly realized that 40% of the money she paid into her levies went directly to Mr. Con, the caretaker because he had a 10 year contract known as the caretaking agreement which also gave him the right to run an onsite letting business. Collectively, these two contracts were called management rights.

At the meeting, Lottie was shocked to find that the Committee had received a request from Kruella that the caretaking and letting agreements be extended. Lottie could not believe her ears! Surely the Committee wouldn’t recommend to all lot owners that they lock themselves into escalating costs for another 10 years!

It was true that Mr. Con mowed the lawn and emptied rubbish bins but if anyone asked Mr. Con a difficult question such as why the pool was turning green or why the sump pumps weren’t regularly serviced, Mr. Con grew surly and, frankly, quite rude.

Lottie attempted to discuss the matter but was curtly informed that the Committee was looking into the matter… no more discussion was permitted. Lottie wondered if the Committee was bewitched.

Mr. Con’s wife, Kruella Con ran the letting pool. Kruella had amazing powers. It was whispered she could rent apartments to holidaymakers for hundreds of dollars but then magically conjure so many expenses payable by the lot owner like cleaning, advertising levies and replacement of coathangers that very little remained for the lot owner. Kruella also charged a commission… always the maximum permitted under legislation. She trilled greetings to those lot owners who were in the letting pool but generally ignored those who weren’t. Lottie grew so worried about her financial state that she decided to approach her Committee to voice concern. Lottie knew the Committee was bound by a code of conduct to act in the best interests of all lot owners. Lottie wrote several letters explaining her concerns but received no reply. Lottie decided to attend a Committee meeting in order to raise her concerns directly with the Committee.

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Over the next few weeks, Lottie noticed Kruella kissing the cheeks of those owners in the letting pool. Mr Con practically lived at the lawn’s edge, immediately clipping any errant blades of grass. Lottie believed they might have an ulterior motive for such attentive behaviour but….hmm…what could it be? In due course, Mr. Con and Kruella were granted the extension. Afterwards, Lottie observed them drinking champagne on the balcony of their apartment with several members of the Committee. Lottie knew it was wrong to eavesdrop but she hid in the bushes below and listened. She heard that Mr. Con and Kruella had a “quiet” contract to sell the management rights for $2,800,000.00. Lottie was aware that the caretaker and his wife had paid $2,000,000.00 just five years ago. This represented a 40% capital gain in 5 years. Maybe there was hope for Lottie yet!

The End or is it

COMMUNITY LIVING SOLUTIONS Reducing Costs & Increasing Value for Unit Owners


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UnitNews Online October 2011

Feature Story

A Quest for Justice Nightmare on Deakin Street

The ‘nightmare’ to which I refer in the title of this article appears to be coming to an end for me and eight other unit owners in the inner Brisbane suburb of Kangaroo Point. However, with the publicity that has surrounded our case in recent months, it may only just be coming to light for countless others in Queensland. For more than a year, we have been fighting a battle to live permanently in our units. The battle has cost us many tens of thousands of dollars in legal fees and development application costs.

Hartley’s Body Corporate Management ‘Looking after all your Body Corporate Needs’

In 2009 I became a first home owner when I purchased a unit in Rivercity Terraces (more commonly known as the Quest on Story Bridge building) at 85 Deakin Street. I was purchasing in the middle of the GFC and wanted to take full advantage of the government’s boost to the first home owner grant. The unit was never intended to be my dream home – merely a way to get into the market and help start my portfolio. The place needed a fair bit of work and over the next 12 months I put my renovation skills to the test. However, it all changed around the time I sought body corporate approval to replace my bathroom. I had no trouble getting approval, however, it was the ‘but’ that went with it that was the problem – I was told that I had no right to live in my unit and wouldn’t be able to continue living in it. It turned out that pursuant to a condition in the original development approval, the building was only suitable for short term and temporary occupants. Owner- occupiers and tenants (even those on leases as short as three months) were potentially in breach of Brisbane City Council’s planning scheme. The revelation certainly came as a shock. Being a solicitor, I thought I had covered my bases by getting specialist property lawyers to carry out the purchase on my behalf. However, no problems were picked up during the conveyance. At the time of sale, I had made the agent aware that I was a first home buyer. Not only did the agent know that I needed to live in the unit (at least for the minimum statutory period required to claim the grant) but it was a condition of sale that the (then) tenant needed to vacate by settlement so I could move in. The agent’s advertising material even promoted the apartment as ‘a great opportunity for the first home buyer’. The fact that the building was largely operated as a hotel, Quest on Story Bridge, was not something that concerned me

3379 7455 ■ Financial Management ■ Agendas & Meetings ■ Administration of your Scheme ■ Maintenance ■ Dispute Resolution ■ Compliance October 2011 UnitNews Online


Feature Story at the time of purchase. Having previously lived as a long term tenant in Oaks River City in Brisbane’s CBD, I was well aware that it was common for such multi-use buildings to operate. There was absolutely nothing about buying my unit that had any alarm bells ringing in my ears. It soon became clear that I wasn’t the only one to find myself in this predicament. Of the 57 units in the building, there were 35 under the management of Quest being used for short term or temporary use (i.e. within the terms of the original development approval). However, it was the 22 units outside Quest’s hotel pool that faced the problem. Many questions needed to be answered. Were these units being used illegally? If so, how long had this been occurring during the building’s 13 year history? How could such a significant condition of the original development approval have fallen through the cracks? How many innocent buyers had mistakenly purchased units thinking that they were entitled to live in them or rent them out on a long term basis? How many agents had misrepresented to buyers that these units could be used by long term occupants? How many lawyers had missed this critical point when carrying out searches during a conveyance? How many other unit owners in Queensland or even Australia could be affected? Despite the numerous unanswered questions, there was really only one thing I needed to know in the short term – how could this problem be resolved? On the advice of town planning consultants, lawyers and council officers, lodging a Material Chance of Use (MCU) application seemed to be the most logical solution. We would need to seek approval to change the classification of the affected units to allow for longer term and permanent occupants. Nine of the 22 owners decided to lodge the MCU application. Others have expressed interest in lodging similar applications in the future (and to comply with the law, they may have no choice but to do so). Identifying the problem was relatively simple compared with the months that followed. It turns out that local businesses, including the Quest franchisee (also the building’s onsite manager and caretaker), were less than happy with our plan. In an objection lodged to our application, the franchisee stated that ‘businesses in Kangaroo Point depend heavily on the travel industry to remain viable’ and that ‘a loss of business means a loss of jobs’. As far as the MCU applicants were concerned, it was difficult to see how nine units could suddenly bring an end to Kangaroo Point’s economy (especially when those nine units hadn’t even

been part of Quest’s short term letting pool). Despite the opposition mounted by local businesses, the applicants received a huge amount of support from neighboring residents, (other) local businesses, the media and politicians (both at a local and state level). The assistance we received from the were forced to deal with a back-flip by our local Councillor months after the application was lodged. Cr Helen Abrahams had originally provided her support for our right to live in our units but changed her mind after speaking with local businesses. Assisted by the Unit Owners Association of Queensland QLD (UOAQ) and its members helped us highlight the strong public support for our cause. Moving forward, the UOAQ will be instrumental in getting the message out that other unit owners face similar problems to the residents of 85 Deakin Street in the media and strong public support. Despite the strong opposition, we have also received a lot of support from neighboring residents, (other) local business as well as the media and numerous politicians (both at a local and state level). On 16 August 2011, I addressed the full chamber of the Brisbane City Council about our case. During my address I highlighted the significant obstacles we had faced in the last year. I made it quite clear that I believed that other unit owners in Brisbane and Queensland are likely to be living in contravention of planning laws. I urged the Brisbane City Council to apply pressure on the State Government to look further into this issue. Shortly after my address, I received an invitation to attend a meeting with the Deputy Premier, Paul Lucas MP. At the beginning of this article I stated that our nightmare ‘appears’ to be coming to an end. While this is largely correct, we still face uncertainly in the near future. Despite receiving approval to live in our units, those that objected to our application (including Quest’s franchisee) still have a right to appeal Brisbane City Council’s decision to approve the application. If this happens, the applicants face a very lengthy battle in the Planning and Environment Court. While this uncertainty would be devastating for us, it would be a disaster for the many thousands of other Queenslanders who are almost certainly caught in the same situation. Cameron Green, Solicitor, Committee Member of Rivercity Terraces (Quest on Story Bridge) Body Corporate and unit owner in Rivercity Terraces


UnitNews Online October 2011

Continuation Story

The 6 Step Process to Developing the Best KPIs

The SSKB Step by Step Plan for Developing the KPIs for a Committee BM Relationship Recap: Why do I advocate the use of KPIs? Where there is disharmony between the BM and a Committee then often the disharmony has symptoms which may possibly be cured or minimised

through appropriate KPIs. Conversely, where there is a significant level of harmony between a Committee and a BM, it is often the case that the personal relationships have transcended the need to write the KPIs down – the people involved have the experience and the

intuition to understand the needs of the common property and the needs of each other. But don’t take this “unwritten understanding” for granted. It may evaporate. So why not take the time to reduce what everybody knows to a written document?

4 reasons KPIs are essential from a committee point of view: 1. 2. 3. 4.

Committees are responsible for the body corporate expenditure. Aside from sinking fund projects, the BM contract will usually be the single biggest line item in the body corporate budget. Just because it is a big number, it should not be regarded as an easy target. There will be much substance behind the number. However, because it is a big number it is appropriate results are measured. In my experience adequately drafted caretaking contracts are few and far between. They just do not provide an adequate description of what it means to “keep the common property in first class order and repair”. How do you write the word picture to ensure that gardens are kept to your standard, and what is the mechanism for paying appropriate remuneration for the varying tasks which are required from season to season to keep the standard? Where disharmony exists the disharmony may stem from the committee believing they cannot affect the level of control they wish to have over the actions of the manager. KPIs provide a committee with a tangible measure they have appropriate control. As my old mentor used to say: “Nobody buys a unit to get involved in the body corporate”. It is just not an appropriate use of the valuable time of the volunteer committee members to monitor the day-to-day operations of the BM. A dash board of KPIs is what the committee needs to make sure the ship is heading in the right direction.

SSKB are striving to educate unit owners in all aspects of body corporate life SSKB has just completed a new free e-Guide to assist all parties involved in a “management rights assignment”. The e-Guide forms part of the Strata Tools available on the SSKB website

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For more information on how SSKB can assist your body corporate email us at or call 07 5504 2000 T 07 3217 9198 | F 07 3909 9499 E A.C.N. 134 005 459

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October 2011 UnitNews Online

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9/2/10 5:22:44 PM

Feature Story

CARETAKING AGREEMENT - V LETTING AGREEMENT The Caretaking Agreement The caretaking agreement is a document which outlines the terms and conditions under which a contract is entered into for the provision of caretaking duties. Amongst other things, it spells out specified duties the caretaker must perform, the level of remuneration, and details any potential grounds for termination of the caretaking agreement. It is an agreement between the Body Corporate and the caretaking contractor for the provision of services in return for specified (and escalating) remuneration, funded via levies paid by all lot owners. The Letting Agreement The letting agreement is generally a document linked to the caretaking agreement which grants the right to the holder of the caretaking contract to conduct a letting and property management business onsite. It is an agreement between the Body Corporate and the contractor for the provision of services. While the caretaking contractor is the only letting agent permitted to operate onsite, owners may wish to appoint an offsite letting agent, either for holiday or permanent rental or even undertake to rent their property themselves... the choice is entirely up to the owner. In order for the caretaking contractor to provide letting and property management services, the contractor must be appropriately licensed and enter into individual agreements with lot owners wishing to use the services of the caretaker as letting agent.

WITHOUT QUESTION, TO FEES AND CHARGES INSERTED INTO THE FORM 20a BY THE LETTING AGENT. Every owner should read and understand the Form 20a before signing because the Form 20a sets the parameters for financial (and other) obligations to be met by the owner. Owners are free to terminate the appointment by giving notice in writing in accordance with the terms agreed in the Form 20a. Specifically, Section 4.2 of Form 20a notes that an owner is entitled to reduce the notice period for termination to 30 days simply by crossing out “90 days” and amending to “30 days” when entering into the agreement. Most owners do not amend this section and are burdened unnecessarily with a termination period of 90 days. Owners are not obliged to agree to any other charges such as cleaning costs, PABX rental or advertising levies without first undertaking individual negotiation with the letting and property management agent. For example, any advertising levies collected by the letting agent from an owner are generally monies held in trust for the purposes of promoting the property for occupation. Such monies should be able to be accounted for at any time. It is a reasonable expectation that an owner should be able to scrutinise the disbursement and effectiveness of any monies expended on promotion and advertising on their behalf.

The individual owner is free to negotiate the exact nature of his or her agreement with the letting agent.

An owner can query expenditure at any time, particularly if it does not comply with the written instructions provided to the letting agent by the owner.

Each individual owner enters into an agreement with the letting agent on a prescribed form (PAMD Form 20a - Appointment of Agent - Letting and Property Management) with individual terms and conditions. The Form 20a upholds the right of any owner (referred to as the “client”) to agree to those fees and charges for letting and property management services which they find acceptable.

An owner can limit the amount of expenditure which can be incurred on their behalf by the letting agent. For example, an owner may stipulate that a letting agent can only incur costs up to $50.00 before seeking the written authority of the owner to proceed with any expenditure greater than that amount. (Legislation provides for “emergency repairs” where there is any threat to life or property)


The letting agent acts for, and on behalf of, the owner and for


UnitNews Online October 2011

UOAQ - Become a Member Today! this receives an agreed commission. The Form 20a permits an individual owner to negotiate the level of commission. Unfortunately, many owners are unaware of their rights in this matter and may agree to higher commissions than necessary. An owner can stipulate rental terms. (e.g. minimum stay period) In fact, the Form 20a provides contact details for the Office of Fair Trading should an owner require more information prior to signing the form and also stipulates that the letting agent comply with the appropriately applicable Code of Conduct. The Form 20a is a very useful tool which enables individual owners to shape the financial performance of their property. After all, that is the ultimate goal for most property owners, particularly investment property owners. A Form 20a can be re-negotiated at any time by mutual agreement. After all, it is in the letting agent’s interest to have a happy owner. Unhappy owners can simply terminate the agreement and find another letting agent. If an owner feels that an investment property is underperforming, perhaps a prudent move might be to approach the letting and property management agent and discuss the possibility of re-negotiating the Form 20a in more favourable terms. Furthermore, an onsite letting and property management agent can also undertake permanent lettings as well as short term holiday letting. Regardless of whether an owner has a property available for short-term holiday let or decides to rent to a long-term occupant, the Form 20a applies.

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October 2011 UnitNews Online


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Clever Solution to parking Problem Queensland based Reserve-A-Park has come up with a clever solution to one of unit owners’ most complained about problems. Units generally come with one or more designated parking spots. How frustrating is it then to come home only to find another vehicle in your space? Not only does it make things inconvenient, but someone else is taking the space that you have paid for. Your remedies are limited by law, you can leave a note on the car, but that doesn’t solve the immediate problem as you have to wait for the driver to leave. You can have the vehicle towed away, but that’s at your expense and any damage to the vehicle becomes your problem. The police are powerless as it is private property and therefore a civil matter. The simplest solution is to prevent the problem from occurring in the first place. The most common method is a sign designating a parking space with an owner or flat number. This will work some of the

Congratulations from RESERVE-A-PARK

Congratulations to Anastasia Dick, winner of the fully installed Reserve-A-Park lucky door prize from the UOAQ Inc AGM draw. time, but visitors don’t always pay attention to those signs. Another alternative is a physical barrier such as a bollard or lift up gate. These are effective up to the point where a large four wheel drive backs over the bollard and damages it beyond repair. Then you are up for an expensive repair and your parking space is effectively unusable until the barrier is fixed. Plus, you always have the inconvenience of having to get out of your car to put the barrier up and down. This is where Reserve-A-Park becomes a great solution. It combines the deterrence of both a sign and a physical barrier without the hassle of having to get out of the car. It is robust and flexible enough to take even the hardest of knocks. Here’s how Reserve-A-Park works: The stainless steel unit is bolted to the roof of the car park. A flexible arm with large and clear signage extends down to indicate that the car parking spot is reserved for the unit owner. In order for a rogue vehicle to enter the spot, the driver has to drive into the flexible arm, risking a scratched car. When

you come home to your unit, a keyring operated remote control electronically lifts the arm allowing you to drive into your spot. When you leave, you push the button again making the arm come down and secure your park. The arm also has the added feature of an automatic stop if you should accidentally activate it when still parked. The electricity is provided by a simple connection to the nearest fluorescent light. Reserve-A-Park out thinks the illegal parker by providing a robust and flexible deterrent that creates both a physical and psychological protection for your parking spot.

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UnitNews Online October 2011

Unit News Online - UOAQ OCTOBER  

The official magazine of Unit Owners Association Queensland

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