High Court at Fort Portal Dismisses Appeal, Holds That Payment of a Deposit Towards Land Purchase Does Not Confer Ownership Where the Agreement Made Completion Conditional on Payment of the UGX 13 Mil
Updated: 2 days ago
High Court at Fort Portal Dismisses Appeal, Holds That Payment of a UGX 2 Million Deposit Towards a UGX 15 Million Land Purchase Price Did Not Confer Proprietary Rights Where the Agreement Made Completion Conditional on Payment of the UGX 13 Million Balance
FACTS
The appeal arose from a judgment of the Chief Magistrate’s Court at Fort Portal in Civil Suit No. 105 of 2017, delivered on 13 February 2025. The Appellants, who had been Defendants in the lower court, challenged the decision in its entirety and advanced ten grounds of appeal.
The dispute concerned approximately four acres of land situated at Kisomoro II Zone, Kasese Road, in Bunyangabu District, formerly Kabarole District. The Respondent, Mugisa Moses, claimed that he purchased the land from the late Edith Kabagahi Opio for UGX 28,000,000. Two agreements dated 5 March 2013 and 12 April 2013 evidenced the transaction. The Respondent contended that he paid the full purchase price, was handed possession of the land, planted boundary marks and thereafter took steps to develop the property.
The Respondent's possession, however, was short-lived. He alleged that approximately three months after taking possession, the Appellants entered the land, chased him and his workers away, destroyed his crops, removed boundary marks and began cultivating and grazing animals on the property.
The dispute subsequently escalated into criminal proceedings. The 1st Appellant was prosecuted and convicted of criminal trespass contrary to section 302 of the Penal Code Act in Criminal Case No. FPT-00-CR-CO-0355-2014. The conviction was not successfully challenged and remained intact at the time of the appeal.
The Appellants' defence was that the 3rd Appellant, Kamanyire Kugonza Paul, had actually purchased the land first. They contended that on 19 October 2012, the 3rd Appellant purchased the land from the same vendor for UGX 15,000,000, paid an initial deposit of UGX 2,000,000, and was entitled to complete payment of the balance of UGX 13,000,000 in January 2013.
According to the Appellants, the vendor subsequently refused to accept the balance because the land had increased in value. They maintained that the 3rd Appellant nevertheless remained the first purchaser and that the 1st and 2nd Appellants occupied the land as his caretakers.
The alleged prior agreement, admitted as DEX1, provided:
“He has paid 2,000,000/, and the balance will be paid in January 2013 when he comes. In case he fails to pay the balance when he comes, I will refund his money.”
The central question therefore became whether this 2012 agreement had already transferred a proprietary or equitable interest to the 3rd Appellant, or whether it remained a conditional and executory agreement pending payment of the balance.
The Respondent's first agreement, dated 5 March 2013, recorded a purchase price of UGX 28,000,000, of which UGX 12,000,000 was initially paid. The balance of UGX 16,000,000 was subsequently paid. A further agreement dated 12 April 2013 recorded receipt of the final payment and stated that the vendor had handed over the land to the Respondent in the presence of the Local Council I executive and residents.
The trial court ultimately found the Respondent to be the rightful owner, declared the Appellants trespassers, ordered vacant possession and issued a permanent injunction. It also awarded UGX 30,000,000 as general and punitive damages, together with costs.
Issues
Whether the 3rd Appellant's agreement of 19 October 2012 (DEX1) constituted a valid, concluded contract of sale that passed an equitable proprietary interest in the land to him ahead of the Respondent's later purchase.
Whether the trial Magistrate correctly construed DEX1 as a provisional/conditional agreement rather than a binding, completed sale.
Whether the Appellants' occupation of the land amounted to lawful possession (as caretakers of the 3rd Appellant) or unlawful trespass against the Respondent.
Whether the Respondent's sale agreements (PEI and PEII), admitted in duplicate form, were properly relied upon absent formal proof of loss of the originals under section 64 of the Evidence Act.
Whether the Respondent's purchase was invalidated because his brother, Julius Baguma, negotiated and executed the initial agreement on his behalf without a registered Power of Attorney.
Whether the trial court properly exercised its discretion in awarding Ug. Shs. 30,000,000/= as a composite sum of "general and punitive damages," and whether the award of costs was proper.
Legal Representation
At the hearing of the appeal, the Appellants were represented by the UPDF Joint Staff of Legal Services, Mbuya, Kampala, while the Respondent was represented by M/s Jingo Ssempijja & Co. Advocates.
Both parties filed comprehensive written submissions, which the High Court stated it had carefully considered alongside the record of appeal, pleadings, evidence, exhibits and the proceedings before the trial court.
Submissions
Submissions for the Appellants
Counsel for the Appellants submitted that the 3rd Appellant was the first purchaser of the suit land and that his agreement of 19 October 2012 constituted a valid and binding contract. It was submitted that the 3rd Appellant had paid UGX 2,000,000 as an initial instalment and that the remaining UGX 13,000,000 was to be paid in January 2013.
Counsel argued that the transaction satisfied the requirements of a valid contract under section 10 of the Contracts Act and relied on Kampala Bottlers Ltd v Damanico (U) Ltd, Supreme Court Civil Appeal No. 22 of 1992, for the proposition that parties are bound by their agreements and cannot unilaterally resile from them.
Counsel further relied on Nsubuga v Barclays Bank (U) Ltd & Another [2008] UGCA 12, submitting that where a creditor or recipient wrongfully refuses a tender of payment, the debtor should not be treated as having defaulted. Reliance was also placed on Semakula v Magala & Others [1979] HCB 90, for the proposition that where a seller refuses to complete a sale, the purchaser may seek specific performance.
Counsel further relied on Ismael Jaffer Allibhai & Others v Nandlal Harjivan Karia & Another, SCCA No. 53 of 1995, together with Megarry and Wade's The Law of Real Property, to submit that a purchaser under a land sale agreement may acquire an equitable interest even before legal title passes.
It was therefore submitted that the vendor had no proprietary interest left to pass to the Respondent when she purportedly sold the same land to him in March 2013.
Counsel disputed the trial court's characterization of DEX1 as a provisional agreement.
It was submitted that the clause providing for refund of the deposit if the balance was not paid was a condition subsequent, rather than a condition precedent to the existence of the contract.
Counsel maintained that the 3rd Appellant had attempted to pay the balance but had been prevented from doing so by the vendor. Reliance was placed on Nuwagaba v Musana, Civil Appeal No. 42 of 2012, for the proposition that a party who prevents another from fulfilling a contractual obligation cannot subsequently rely upon that non-performance as a breach.
Counsel further submitted that the 3rd Appellant's possession of the land constituted constructive notice to the world. It was argued that because the Respondent should have observed the Appellants' occupation, he could not properly claim to be a bona fide purchaser without notice.
Counsel accordingly submitted that the 1st and 2nd Appellants were lawfully on the land as caretakers of the 3rd Appellant and that the criminal trespass conviction against the 1st Appellant did not determine the 3rd Appellant's proprietary claim.
Counsel challenged the Respondent's reliance on duplicate copies of the sale agreements, arguing that there had been no proper foundation for admitting secondary evidence under section 64 of the Evidence Act.
It was further submitted that the Respondent's brother had acted as an agent in the initial transaction without a registered Power of Attorney, contrary to the principle relied upon from Kagwa v Kiyimba [1992] IV KALR 52.
Counsel also argued that the Respondent had failed to undertake sufficient due diligence before purchasing the land.
On damages, Counsel submitted that the trial Magistrate had improperly awarded UGX 30,000,000 as general and punitive damages without sufficient evidentiary basis. Relying on Attorney General v Orient Bank Ltd & Others, SCCA No. 6 of 2010, and Livingstone v Rawyards Coal Co. (1880) 5 App Cas 25, Counsel argued that damages should compensate rather than unjustly enrich a claimant.
Submissions for the Respondent
Counsel for the Respondent supported the trial court's decision and submitted that the alleged 2012 sale to the 3rd Appellant had not matured into a completed sale.
It was argued that the 3rd Appellant failed to pay the balance of UGX 13,000,000 and did not take legal steps to compel the vendor to accept payment or to obtain specific performance.
Counsel submitted that the vendor was entitled to rescind the transaction and that the 3rd Appellant's failure to pursue specific performance for several years was fatal to his position. Counsel further argued that the doctrine of separation of legal and equitable interests relied upon by the Appellants was inapplicable because the suit land was customary land rather than registered land.
Counsel submitted that the Respondent had paid the entire purchase price, had taken possession and had established boundary marks before the Appellants entered the land. It was argued that the criminal conviction of the 1st Appellant remained valid and supported the Respondent's case that the occupation was unlawful.
Counsel submitted that the Appellants had not objected to the admission of the Respondent's agreements during trial and therefore could not properly raise their admissibility for the first time on appeal. It was further submitted that the documents were corroborated by several witnesses, including the person who drafted the first agreement, the Respondent's brother who delivered the purchase money and the Local Council I Chairperson who witnessed the transaction and handover.
On the Power of Attorney argument, Counsel submitted that PW2 merely acted as a courier and representative of the Respondent and that the Respondent personally signed the final documents and subsequently confirmed the transaction. It was submitted that the Respondent had undertaken due diligence through local authorities before completing the purchase.
Counsel maintained that the UGX 30,000,000 award was justified by the Respondent's loss of use of the land, destruction of crops and inability to develop the property. It was further submitted that costs properly followed the event because the Respondent had substantially succeeded in the litigation.
Court's Findings
The High Court first reaffirmed the duty of a first appellate court. Justice Wagona noted that the Court was required to reconsider and independently evaluate the entire evidence while giving appropriate allowance to the trial Magistrate's advantage of having seen and heard the witnesses.
The Court relied on Father Nanensio Begumisa & Three Others v Eric Tiberaga, SCCA No. 17 of 2000, observing that a first appellate court must reconsider the evidence and draw its own conclusions, although it should not lightly interfere with findings of fact unless the trial court's findings are unsupported by the evidence, based on a misapprehension of the evidence or founded on wrong principles.
The Court further reiterated that the burden of proof in civil proceedings remains proof on a balance of probabilities, guided by sections 101, 102 and 103 of the Evidence Act.
THE 2012 AGREEMENT DID NOT TRANSFER IMMEDIATE EQUITABLE OWNERSHIP
The High Court examined DEX1 and focused on the language stating:
“He has paid 2,000,000/, and the balance will be paid in January 2013 when he comes. In case he fails to pay the balance when he comes, I will refund his money.”
The Court held that the agreement was not an unconditional and completed sale.
Justice Wagona explained that section 9 of the Contracts Act recognizes the requirements for a valid contract, but that in land transactions the Court must still determine whether the parties intended an immediately concluded sale or a conditional arrangement.
The Court referred to Halling Manzoor v Serwan Singh Baram, Civil Appeal No. 9 of 2001 [2002] UGSC 41, in explaining the distinction between a binding agreement subject to a condition and an immediately completed transfer of proprietary rights.
The balance of the purchase price was a condition to completion
The Court held that the agreement fell within the category of contingent agreements contemplated under the Contracts Act.
It was expressly held:
“DEX1 falls squarely within the latter category.”
The Court found that payment of the outstanding UGX 13,000,000 was not merely an administrative step. Rather, it was the event upon which completion of the transaction depended.
Accordingly, the agreement remained executory and conditional.
The Court held:
“DEX1 created contractual rights capable of enforcement according to its terms, but it did not amount to an unconditional and completed sale vesting immediate equitable ownership in the 3rd Appellant.”
The Court rejected the argument that merely signing a land sale agreement necessarily and automatically transfers equitable ownership.
It stated that;
“Whether an agreement constitutes an immediately binding disposition of an equitable interest or merely creates contractual rights depends, not upon its label, but upon the true intention of the parties as objectively expressed in the language of the agreement itself.”
The Court observed that the provision requiring the vendor to refund the UGX 2,000,000 deposit if the balance was not paid. It observed that a clause providing for refund was inconsistent with an intention that ownership had already irrevocably passed.
The Court reasoned that if the parties had intended an immediately completed sale, the agreement would more naturally have provided remedies associated with an existing sale rather than simply requiring refund of the deposit.
The Court therefore concluded that;
“The only construction that gives coherent effect to every provision of DEX1 is that the parties intended the agreement to remain conditional until the balance of the purchase price was duly paid.”
An important aspect of the judgment was the Court's treatment of equitable ownership. The Appellants had relied on the equitable doctrine that a purchaser under a land sale agreement may acquire an equitable interest before legal title passes.
The Court accepted the general principle but emphasized that equity does not disregard express contractual conditions.
It held:
“Equity does not ignore conditions which the parties themselves have expressly imposed.”
The Court consequently rejected the argument that equitable ownership automatically arose upon payment of the initial UGX 2,000,000.
FAILURE TO ENFORCE THE ALLEGED PRIOR AGREEMENT
The Appellants argued that they had attempted to tender the outstanding UGX 13,000,000 but that the vendor had wrongfully refused to accept it. The High Court noted, however, that despite the alleged refusal, the 3rd Appellant took no legal action from 2013 until the commencement of the civil proceedings.
The Court noted that he did not seek specific performance, enforce the contract or deposit the money in court. The Court therefore found the reliance on Nsubuga v Barclays Bank insufficient in the circumstances.
The Court found the written agreement did not grant immediate possession upon payment of the UGX 2,000,000 deposit.
The Court observed that;
“Any purported verbal agreement to grant immediate possession conflicts with the written terms which explicitly envision a total reversal of the transaction if the balance is not completed.”
The Court held that after January 2013 the Appellants' remedy lay in enforcing whatever contractual rights remained under DEX1. Given the express refund provision, the Court held that the remaining remedy was recovery of the UGX 2,000,000 deposit, subject to limitation.
THE APPELLANTS WERE TRESPASSERS
Having found that the 3rd Appellant had not acquired proprietary ownership through DEX1, the Court turned to possession and trespass. The Court relied on Justine E.M.N. Lutaya v Sterling Civil Engineering Co. Ltd, SCCA No. 11 of 2002, for the principle that trespass to land is an injury to the possessory rights of a person in actual or constructive possession.
The Court found that the Respondent had proved payment of the full purchase price through PEI and PEII. The Local Council I Chairperson confirmed that the land had been formally handed over to the Respondent in April 2013. The Court further noted that the Appellants entered the land a few months later and that the 1st Appellant had subsequently been convicted of criminal trespass.
The Court therefore held that
“The trial Magistrate's finding that the Appellants were trespassers was fully supported by both oral and documentary evidence.”
Grounds 1–5 consequently failed.
ON THE DUPLICATE SALE AGREEMENTS
The Appellants challenged the Respondent's reliance on duplicate copies of the sale agreements, arguing that the requirements for secondary evidence under section 64 of the Evidence Act had not been satisfied. However, the High Court rejected the argument. First, the Court noted that the Appellants had not objected when the documents were tendered at trial.
The Court explained that a party who had an opportunity to challenge admissibility but failed to do so could not ordinarily object for the first time on appeal.
The Court observed that objections should be raised at the earliest opportunity so that the trial court can determine them and, where necessary, allow the party relying upon the evidence to cure any defect.
The Court further held that the Respondent had not relied upon the documents in isolation. PEI and PEII were supported by; PW1, who drafted and witnessed the first agreement; PW2, who delivered the purchase money; PW3, the Respondent himself;
PW4, the Local Council I Chairperson; evidence of the physical handover; evidence concerning boundary marks; Local Council records; and the subsequent criminal proceedings.
The Court therefore held that even if the agreements had been excluded, the surrounding evidence overwhelmingly supported the Respondent's case.
NO REGISTERED POWER OF ATTORNEY WAS REQUIRED FOR THE CUSTOMARY LAND TRANSACTION
The Appellants argued that the Respondent's brother, PW2, had acted without a registered Power of Attorney and that this invalidated the transaction. However, the High Court rejected that argument. Justice Wagona distinguished the general law of agency under the Contracts Act from the formal requirements applicable to registered land under the Registration of Titles Act.
The Court noted that sections 117–169 of the Contracts Act codify agency and that section 121 expressly recognizes both express and implied authority. The Court further observed that section 130 of the Registration of Titles Act, concerning registered Powers of Attorney, applies to dealings by proprietors of land under the operation of that Act. The suit land was customary land and no certificate of title had been produced.
The Court held that
“The statutory requirement for a registered Power of Attorney under Section 130 was therefore inapplicable.”
Agency could be established by conduct
The Court found that PW2 had been expressly authorized by the Respondent to identify land, negotiate the purchase and facilitate the transaction. The Court held that his actions fell squarely within the statutory definition of agency.
The Court further relied on section 122(1) of the Contracts Act, which extends an agent's authority to acts necessary and lawful for accomplishing the authorized transaction.
Subsequent ratification
Importantly, the Court held that even if PW2 had initially lacked sufficient authority, the Respondent's subsequent conduct amounted to ratification.
The Court noted that the Respondent paid the balance; accepted the vendor's handover; took possession; fenced the property; participated in establishing boundary marks; and instituted proceedings to protect his rights.
The Court held that these acts constituted unmistakable ratification under sections 129–132 of the Contracts Act.
The Court therefore rejected the Power of Attorney objection.
RESPONDENT PROVED OWNERSHIP ON A BALANCE OF PROBABILITIES
Having reconsidered the entire record, the High Court concluded that the Respondent had established his case on a balance of probabilities.
The Court was satisfied that PW2 lawfully acted as the Respondent's agent; the Respondent subsequently ratified PW2's actions; the vendor recognized and completed the transaction in favour of the Respondent; the Respondent paid the full purchase price; and the Respondent was placed in possession of the land.
The Court therefore held that the trial Magistrate had committed no error in finding the Respondent to be the lawful purchaser and owner.
Grounds 7 and 8 consequently failed.
GENERAL AND PUNITIVE DAMAGES MUST BE SEPARATELY ASSESSED
The appeal produced an important clarification concerning the assessment of damages. The trial Magistrate had awarded UGX 30,000,000 as “general and punitive damages” without separating the two heads.
The High Court held that this approach constituted an error of principle.
Justice Wagona emphasized that general damages and punitive damages are legally distinct remedies serving different purposes.
The Court held that;
“A court exercising judicial discretion must therefore separately consider whether each head has been established, give reasons for its award, and specify the amount awarded under each head.”
General damages
The Court reaffirmed that general damages are fundamentally compensatory.
Relying on Livingstone v Rawyards Coal Co., the Court explained that their purpose is to place the successful claimant, as far as money can do so, in the position he or she would have occupied had the wrong not occurred.
The Court stated that general damages may compensate for matters such as:
inconvenience;
anxiety;
loss of enjoyment;
humiliation; and
interference with proprietary rights.
However, judicial discretion must still be exercised according to established legal principles.
Punitive or exemplary damages
The Court distinguished punitive damages from compensatory damages.
It held that punitive damages are intended not to compensate but to punish conduct which is oppressive, arbitrary, unconstitutional or contumelious and to deter similar conduct.
Because such damages are exceptional, the Court held that the judgment should identify the conduct deserving punishment and explain why ordinary compensation would be inadequate.
The Court stated that
“Punitive, exemplary or vindictive damages stand upon an entirely different footing.”
Composite award was an error of principle
The Court therefore found that the trial Magistrate erred by making one undivided award. The Court held that it was impossible to ascertain from the composite award whether the trial court had properly appreciated the distinct objectives of the two heads of damages.
It consequently found that the trial court had exercised its discretion upon an erroneous principle and that appellate intervention was justified.
THE COURT RETAINED THE UGX 30 MILLION TOTAL BUT APPORTIONED IT
Although the High Court found the method of assessment erroneous, it did not find the overall amount of UGX 30,000,000 unreasonable.
The Court took into account the nature of the trespass; the period during which the Respondent was deprived of the land; the criminal conviction; the conduct of the Appellants; the Respondent's inconvenience and loss; and the need to avoid unjust enrichment.
The Court apportioned the total award as follows UGX 20,000,000 on General damages and UGX 10,000,000, Punitive/exemplary damages
The Court expressly held that Ground 9 succeeded only to that limited extent.
COSTS FOLLOWED THE EVENT
On costs, the Court relied on section 27(1) of the Civil Procedure Act.
The Court reaffirmed the general principle that costs follow the event unless there is sufficient reason for the court to order otherwise.
Although the Appellants succeeded to a limited extent on Ground 9, their success related only to the manner in which damages were expressed and assessed. They failed on the substantive questions of ownership, liability and trespass.
The Court therefore found no basis for disturbing the trial court's award of costs.
HOLDING
The High Court substantially dismissed the appeal.
It held that:
The 19 October 2012 agreement between the 3rd Appellant and the vendor was conditional and executory, not an unconditional completed sale.
The payment of UGX 2,000,000 did not, in the circumstances, confer immediate equitable ownership on the 3rd Appellant.
The contractual requirement to pay the outstanding UGX 13,000,000 was a condition upon which completion of the transaction depended.
The express refund clause demonstrated that the parties contemplated that the transaction could fail to mature into a completed sale.
The 3rd Appellant's failure to take timely legal steps to enforce the alleged agreement weakened his claim to proprietary rights.
The Respondent successfully proved his purchase and ownership of the land.
The Appellants' subsequent entry and continued occupation amounted to trespass.
The challenge to the Respondent's duplicate sale agreements could not properly be raised for the first time on appeal after the documents had been admitted without objection at trial.
A registered Power of Attorney was not required merely because the Respondent used his brother as an agent in a transaction involving customary land; the general law of agency under the Contracts Act applied.
The Respondent's subsequent conduct also amounted to ratification of the acts undertaken by his brother.
General and punitive damages are legally distinct and must be separately considered, justified and quantified.
The trial court's composite award of UGX 30,000,000 was therefore erroneous in principle, although the total amount remained reasonable.
FINAL ORDERS
The Court ordered that:
The appeal substantially failed.
Grounds 1–8 and Ground 10 were dismissed.
Ground 9 succeeded only to the limited extent concerning the composite assessment of damages.
The UGX 30,000,000 award described as “general and punitive damages” was set aside.
The Court substituted it with:
UGX 20,000,000 general damages; and
UGX 10,000,000 punitive/exemplary damages.
The declaration that the Respondent was the owner of the land was affirmed.
The orders for vacant possession and permanent injunction were affirmed.
The Respondent was awarded three-quarters (¾) of the costs of the appeal.
Read the full decision
KEY TAKEAWAYS
1. Not every land sale agreement immediately creates equitable ownership
The judgment is significant because it cautions against treating every agreement for sale of land as automatically transferring an equitable proprietary interest. The Court emphasized that the actual wording and intention of the parties must be examined.
2.
Where parties expressly agree that completion depends on payment of a balance, the Court will give effect to that condition. A purchaser cannot necessarily rely on equitable principles to bypass a condition that the parties themselves deliberately incorporated into the agreement.
3.
The agreement's provision that the deposit would be refunded if the balance was not paid was central to the Court's interpretation. The clause demonstrated that the parties contemplated the possibility that the transaction would not be completed.
4. A purchaser who claims wrongful refusal of payment should act
The Court was concerned that the 3rd Appellant allegedly attempted to tender payment but then took no legal action for years to compel completion, obtain specific performance or otherwise enforce the agreement.
5.
The Appellants relied heavily on their physical occupation of the land.
The Court, however, distinguished physical occupation from legally established proprietary rights. Because DEX1 had not matured into a completed sale, the Appellants could not rely on their occupation as evidence of ownership.
6. Agency on customary land does not automatically require a registered Power of Attorney
The judgment clarifies the distinction between the formal Power of Attorney requirements applicable to dealings with registered land under the Registration of Titles Act and the general principles of agency under the Contracts Act.
Express or implied authority may be sufficient under the general law of agency.
7. Ratification can cure an initial lack of authority
Even where an agent's authority is subsequently questioned, the principal's conduct may amount to ratification. Here, payment of the balance, acceptance of possession and subsequent conduct asserting ownership were sufficient to demonstrate ratification.
8.
The Court reaffirmed that a party should not ordinarily wait until an appeal to challenge the admissibility of documentary evidence where the opportunity to object existed during trial.
9. General and punitive damages must not be lumped together
A court awarding both heads should:
identify each head;
establish the legal basis for each;
give reasons for each award; and
specify the amount awarded under each head.
A composite award may constitute an error of principle even where the overall figure is reasonable.
10. An appellate court may preserve a reasonable total award while correcting the method of assessment
The High Court did not simply reduce the UGX 30 million award.
Instead, it found the total reasonable but corrected the legal error by separating it into UGX 20 million general damages and UGX 10 million punitive damages.
Conclusion
The decision is important, particularly for land transactions involving instalment payments and customary land. A purchaser should not assume that paying a deposit alone transfers proprietary rights. The terms of the agreement must be carefully examined to determine whether the transaction is complete, conditional or merely executory.
Equally, where a vendor allegedly refuses to accept the balance of the purchase price, the purchaser should take prompt legal steps to enforce the bargain, rather than simply remaining in possession and asserting ownership.
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