HC Deb 26 March 1998 vol 309 cc738-49
Mr. Jenkin

I beg to move amendment No. 21, in page 53, line 17, leave out 'or limiting'.

This is a probing amendment, to enable us to have a discussion about a major innovation in the arrangements for court scrutiny of decisions and actions of the Welsh assembly. The traditional role of the courts has been to decide what the law is, and no more; to establish the intentions of Parliament as expressed in statute.

One assumes that, with the Welsh assembly passing orders and the Scottish Parliament passing primary and secondary legislation, the courts will continue to play that impartial role.

We had a debate before 7 o'clock that uncovered something of a fog and a muddle about the overlap between the Official Secrets Act and the status of the Welsh assembly as an extension of the Executive rather than a legislative body. We have in clause 110 a major innovation in the nature of administrative law. It is quite usual for orders that are passed by the House to be subject to judicial review.

For example, it is common for the implementation of social security legislation by the Benefits Agency or the Government to be challenged by someone claiming entitlement to benefits to whom the Government never intended the benefit to be payable, and for the courts to decide that the construction of the legislation means that the applicant is entitled to the benefit. Benefits are often claimed retrospectively. The applicant may appeal for benefit going back to a start date years before the court decision. By deciding in favour of the applicant, the court effectively places a liability on the Government to pay the applicant back to the start date.

The court decides what the law is since the order came into force and what the law was, and implements the effects of that decision. Some people regard that as a decision with retrospective effect. The court would simply say that it decides what the law is and that the fact that it has retrospective effect has nothing to do with it. The question of what is a court decision with retrospective effect and what is not is a subjective judgment.

It is a matter of concern that the retrospective effects of court judgments have crept into this legislation. It will be for people interpreting it to decide what is meant by a court decision with retrospective effect. It could be argued that, by giving the courts the power to limit or remove retrospective effects, we are giving them precisely the powers that they do not have at present—the power to change the state of the law retrospectively with regard to decisions they make.

The point about judgments with retrospective effect is that they are a political matter requiring political judgment. We have seen the effects of retrospective court judgments on the law of this country in the decisions of the European Court of Justice. The classic and most disruptive case that we have suffered in Britain so far is the Barber case, in which judgments were made about sex equality in pensions provision that had huge consequences for the funding of pensions in Britain. It was only because the previous Government—when renegotiating the Maastricht treaty—decided to incorporate new legislation to limit the effects of that decision that we did not have to change the entire structure of pensions in this country retrospectively. That was a political decision.

In the case of social security orders, Governments will often produce an order quickly to trammel up the consequences of a court judgment, arguing from a political standpoint that it was never the intention of the Government or of Parliament to legislate in the way that the court has interpreted.

The clause transfers the judgment, usually made by Ministers in Parliament, about limiting or dealing with retrospective effects to the courts. One could argue that an obligation is placed on the court to make that judgment. The clause states that the court has the power to make a provision of subordinate legislation".

Dr. Marek

I do not want to appear rude, but it would be helpful if the hon. Gentleman could say whether he is in favour of his own amendment or not. Ministers are subject to judicial review, and it is right that that should be so. Equally, the assembly—acting through Committee or Government—ought to be subject to some sort of judicial review. He is seeking to narrow the scope of judicial review by removing the words "or limiting". I should have thought that the court ought to keep as much power as possible.

Mr. Jenkin

I fear that the hon. Gentleman is mistaken. We have no desire to limit the scope of judicial review applicable to Ministers of this Government, the Welsh assembly or anywhere else. It has become a fixture of the United Kingdom constitution that everyone making administrative decisions is subject to review by the courts. The clause is not about whether there should be judicial reviews or not—that is dealt with by clause 109 and schedule 7.

We are discussing whether the clause gives additional powers to the courts not just to interpret the law and to establish what it is, but to change it so that the effect of their decision may have retrospective effects. That is an innovation in terms of judicial review, except with regard to European Union law, where the European Union courts have that discretion. Therefore, in a matter of EU law, our courts have that discretion.

The anomaly that the clause is in danger of creating is that the same orders passed through this House with regard to England, and through the Welsh assembly with regard to Wales, will be subject to different methods of interpretation. The assembly might decide to take the text of an English order and translate it into a Welsh order, with identical wording and legal effects. In two identical cases of judicial review, the English courts might make a decision without the ability to remove or limit the retrospective effects. A decision under the proposed procedure might have a completely different effect, because the court could decide to make a provision of subordinate legislation which might remove or limit the retrospective effect.

In principle, we think that legislation should be advanced on the basis of rational argument, debated between accountable and elected people and decided by legislative authorities, not the courts. This provision removes the right of redress from the original litigant. An appellant in a case related to a social security order who wins the right in law to claim 12 years' back payment of a particular benefit may find that the court arbitrarily decides to remove his right to have it. It is one thing for Parliament and Ministers to decide who should receive money and who should not, but that has never been the role for our courts.

In an area of shared competence such as agriculture, cases may emerge involving farmers applying for hill livestock compensatory allowance. The order for the renewal of the payment may be made in the future for England with an order through this House and, for Wales, with an order through the Welsh assembly. Identical law could be interpreted differently with differing effects, which could be to the advantage or disadvantage of Welsh people.

It is incumbent on the Government to explain why they think the courts should have legislative discretion in these matters. If the courts are going to have it, why should not all courts in the United Kingdom have the discretion to deal with the retrospective effects of decisions of this nature?

7.15 pm
Mr. Denzil Davies (Llanelli)

I congratulate the Opposition on tabling the amendment. Some of us tabled a similar amendment in Committee, but the guillotine prevented us from debating it.

This is an important clause. A litigant who brings an action and succeeds in persuading a court that the Welsh assembly has acted unlawfully—that is, outside its power in relation to subordinate legislation—could normally expect to receive damages or the restitution of any money paid to the Government. However, clause 110(2) enables the court to deny potential litigants who would have litigated but did not because the initial litigant took the matter to court. It denies the consequences of the initial judgment. The court can say, "Although, in principle, you are right, in this case you cannot have the money." There may be other consequences, and a lot of money may have to be paid to others who may be able to claim.

I suspect that the antecedents of this part of the Bill lie in the Barber decision of the European Court of Justice. That was a special case, because, if the court decides whether there is a retrospective effect or not, possibly hundreds of people can claim. There is no legislature standing behind the European Court of Justice, so a legislature cannot overturn the decision—in other words, this House could not have overturned the decision of the European Court of Justice in the Barber case, because the court extends beyond the competence of this House. Quite properly, it was agreed at Maastricht that the Council of Ministers could limit the Barber decision in this way.

Mr. Jenkin

The difference between the European Court of Justice and our courts is that the European Court of Justice must fill in the gaps of vaguely worded legislation, so that situation arises more often. There is not the same need for a measure of this nature in our very detailed law as there is in European law, which is so vaguely drafted.

Mr. Davies

I do not think that that was the problem in the Barber case. Not long ago, there was a case in which the House of Lords held that people who deposited money with a building society could recover some tax. That would have caused the British Government to pay out vast sums of money.

I believe that, following the judgment in another case that would have cost the British Government a great deal of money, the House legislated in a Finance Bill in effect to deny that consequence. The House had the power to do so, but the House has no power to overturn decisions of the European Court of Justice. Therefore, it was necessary for the Council of Ministers to come up with an arrangement that enabled it to limit the consequences of a decision of the European Court of Justice; that was done by treaty.

I suspect that clause 110 has its origins in the clever way that things were done in respect of the Barber Case. I am not arguing against that. As the hon. Member for North Essex (Mr. Jenkin) said, it is right from time to time for the House to legislate and, in effect, overturn the decision of a court—perhaps not in respect of the litigant, but in respect of all the other potential litigants. That is perfectly proper, and it has been done.

However, that is a political decision, taken in the House by elected representatives, who openly overturn the decision of the court. As the hon. Member for North Essex said, in this case we are being asked to pass a measure that would enable a court to say: "Yes, Mr. Jones, plaintiff, we hold for you; but no, Mr. Jones, plaintiff, you will not get the money, because we, as a court, have determined, in accordance with section 110, that we are allowed to remove or limit whatever is meant by 'retrospective effect-.

I would not wish to go into an Austinian discussion of the jurisprudential position of courts—whether they always decide retrospectively, by plucking out of the air law that has been there all the time. I do not know what "retrospective effect" means, but I believe that the intention is to deny other potential plaintiffs, or even the plaintiff in the case, the money that they would otherwise be given.

That can be done. It is distasteful if a democratic assembly does it, but I understand that, because of the effects on public money, it might have to be done from time to time. However, I see no reason why a court should be allowed to do that.

There is a good subsidiary point. As I understand it, if a court in the United Kingdom decided that an order of this Parliament was unlawful, there would be no power for the court to deny the litigant or other potential litigants the money; but if the order was an order of the Welsh assembly, apparently, section 110 could be prayed in aid, and the "Attorney General", no less—the Attorney-General of England and Wales, presumably—could come along and say, "Please do not apply the Welsh order, because it will cost us a lot of money."

This is another nonsense. I hope that the Minister will tell us that he will go away and reconsider the clause, with a view to doing something in the House of Lords.

Mr. Letwin

Mr. Deputy Speaker, by your leave, before I make my remarks on amendment No. 21, I should like to place it on the record that I made a factual mistake last night. Many schools in English postal districts do indeed, as the Minister suggested, lie in Wales. As the hon. Member for Brecon and Radnorshire (Mr. Livsey) pointed out to me, they lie in his constituency, so I apologise to the House.

Amendment No. 21, to which my hon. Friend the Member for North Essex (Mr. Jenkin) drew attention and on which the right hon. Member for Llanelli (Mr. Davies) spoke with his customary acuity, draws attention to a point that goes beyond the scope of the points that my hon. Friend raised.

It has sometimes been said during our debates that those of us who are not Welsh Members should hesitate before speaking about some aspects of the Bill.

Amendment No. 21 brings out extremely clearly why English Members should attend very closely to the contents of the Bill and to each clause in it; for if clause 110(2)(a) were to remain, the precedent effect of the Bill on English legislation would be very great.

I am convinced that the right hon. Member for Llanelli is right to say that, somewhere in the bowels of the Government legal machinery, a great guru enunciated some general principle that clauses of this type were henceforward to be inserted wherever possible, to prevent the repetition of Barber. It is of the utmost importance, therefore, that we place on the record in this debate the fact that there are profound objections to such a provision.

It must be admitted that the phrase used in the governing clause, so to speak, of subsection (2) is permissive rather than compulsory. It says, not that the court or tribunal must make an order, but that it "may" make an order. The Minister might—I want to fend off that possibility—be tempted to argue that there is nothing constitutionally objectionable about the clause, because it leaves it open to the discretion of the court whether to take advantage of the permission. However, if he were tempted to do so, he should resist the temptation, because it is objectionable that a court should be put in a position where it would have even the discretion to deprive people who had a legitimate expectation, which had been falsified by the incorrect application of an order, of that expectation, as the right hon. Member for Llanelli said.

Mr. Jenkin

As my hon. Friend will see from the amendment paper, in amendment No. 19, which was not selected, we toyed with the idea of removing the discretion to make the clause read "shall", not "may", precisely because the courts are being put in the position of deciding whether to let the Executive off the hook. That seems extraordinary. In a heated and controversial case, judges might be under severe political pressure to decide in a certain way.

Mr. Letwin

I entirely take that point, and I suppose that that would have been the ultimate probing amendment, which would have pushed the Government into acknowledging what they were, in effect, doing to the court.

I take the argument a step further, because something is happening that is even more remarkable than my hon. Friend the Member for North Essex or the right hon. Member for Llanelli made out. In this case, what is being provided for is not that a court should take a view about the implementation of an order in a judicial review, but that it should take a view about the vires of an assembly, a legislative body, having made a statutory instrument in the first place.

Mr. Hain indic

ated dissent.

Mr. Letwin

The Minister shakes his head; perhaps I mistake. I thought it was clear from clause 110(1), to which subsection (2) obviously refers, that we are talking here about where any court or tribunal decides that the Assembly did not have the power to make a provision of subordinate legislation". Therefore it seems clear, on a layman's reading—I am happy to give way if the Minister wants to correct me-that the court is being asked to decide not whether the subordinate legislation has been applied appropriately by an executive agency but whether the subordinate legislation is within the vires that have been granted to it by the primary legislation, and presumably, the transfer of functions order, under which the Welsh assembly operates.

Unsurprisingly, because it follows clause 109, which deals with devolution issues, clause 110 is part of the bizarre and byzantine structure with which we are confronted in many aspects of the Bill, but especially in clause 110, in which the courts—ultimately the judicial committee; in this case, any appropriate court—have been prayed in aid to determine whether a quasi-Parliament is acting properly.

That is emphasised by the retrospection issue. It is of great importance whether the Minister, in his closing remarks, is willing, first, to defend the proposition in subsection (2)(a), to which amendment No. 21 refers; secondly, to defend the general proposition that the courts should have been put in the position of making judgments about the propriety or impropriety of legislation; and, thirdly, to grant that that should never be seen as having a precedent effect.

Mr. Denzil Davies

I do not know whether I am following the hon. Gentleman's argument. The courts do it all the time—in fact, they do it to the House. Some of us have always had reservations about judicial review and the lengths to which it can go. The courts may strike down subordinate legislation of this place if they believe that it is unlawful and not within the ambit of the primary legislation.

Mr. Letwin

There have been such cases. However, in those circumstances, if Parliament did not agree with the import of the court's decision, it could produce new primary legislation to contradict the court. That option is not available here.

We are saying that the court is being placed between the assembly and Parliament. There is nothing objectionable about that, so long as the Minister is willing to make it clear that that will not set any kind of precedent for subsequent English legislation. The Minister must deny specifically that the retrospection limitation will have a precedent effect for English legislation. It would be even better if he would accept the amendment and remove that effect from Wales, and hon. Members who represent Welsh constituencies should be concerned about that.

7.30 pm
Mr. Hain

I begin by accepting the graceful apology offered by the hon. Member for West Dorset (Mr. Letwin), although I must admit that the sight of him scampering out of the Chamber in search of a Welsh school in Herefordshire was a delicious one. I caught my breath for a moment for fear that he might discover one for which I had responsibility.

In moving the amendment, the hon. Member for North Essex (Mr. Jenkin) made some fair points. I shall also reflect upon the detailed points raised by my right hon. Friend the Member for Llanelli (Mr. Davies). I think we shall find that there is no reason to alter the clause, but I shall consider his comments nevertheless.

Clause 110 deals with cases where a court or tribunal decides that the assembly did not have the power to make a provision of subordinate legislation that it purported to make. It provides a power for the court or tribunal to remove or limit any retrospective effect of the decision, or to suspend its effect. The Government believe that it is important that courts and tribunals have the power to vary the retrospective effect of such decisions. That is necessary, because the court or tribunal will be declaring invalid legislation which, until that point, had been considered to be perfectly valid on the advice of counsel when it was tabled.

Clause 110 affords a court or tribunal the power to protect those who had been acting in a straightforward manner on that basis. It also allows the court or tribunal to preserve the legal effects of anything already done in reliance on the erroneous legislation. The hon. Member for West Dorset asked whether it is permissive, and to that extent it is. However, the court or tribunal must be given the discretion to consider when—not whether—to exercise that power.

Clause 110(3) already offers protection to persons who are not party to the proceedings, by requiring the court or tribunal to have regard to the extent to which they would otherwise be adversely affected by its decision. I do not want to offer predictions about when it will be necessary for a court or tribunal to use the power conferred by clause 110, but it might help the House if I give a hypothetical example.

Mr. Jenkin

The Minister said very emphatically that the clause allows the court to decide when—not whether—to limit or remove retrospection. However, clause 110(3) states: "In determining whether to make an order under this section". It is perfectly clear that it is whether and not when. I do not know why the Minister believes that it is when rather than whether.

Mr. Hain

I was trying to explain that discretion in respect of retrospection is about the precise timing of any compensation. I shall give an example.

Let us assume that the assembly makes some regulations. Some two or three years later, a court may rule that the regulations were not within the assembly's powers. The court might then have to decide whether it should make an order declaring that the assembly's regulations were ultra vires, but only from the date of the application made by the person who brought the case as opposed to the date on which the regulations were made. That is the sort of practical problem that clause 110 seeks to address. I assure the hon. Member for North Essex that it is not a question of letting the assembly—or any assembly Members responsible—off the hook. It is simply a question of applying this matter sensibly.

Amendment No. 21 would restrict the discretion of a court or tribunal in its ability to vary the retrospective effect of its decision that subordinate legislation of the assembly was ultra vires. It would mean that the court or tribunal could remove the retrospective effect but not limit it. Amendment No. 21 ties the hands of the court or tribunal to an all-or-nothing approach, which I do not think is sensible. I appreciate that this may be a probing amendment, but I believe that its outcome would be highly undesirable. I should add that clauses 93(2) and 93(3) of the Scotland Bill use wording similar to clause 110.

Mr. Denzil Davies

My hon. Friend has explained that the court will be allowed to limit the ultra vires effect of the order to the date of the court's pronouncement, and that the ultra vires effect would not go back to the date of the promulgation of the order. I understand that. That will be the case in relation to subordinate legislation or an order made by the Welsh assembly.

The Minister has now said that that will also be the position in respect of Scotland. Does he agree that that would not be the position in respect of subordinate legislation made by this place that is considered unlawful by the court? The situation is different so far as the House is concerned. Do the Government propose to introduce the same sort of legislation to limit the ultra vires effect in the case of this place?

Mr. Hain

No, for the reasons that I am about to give. My right hon. Friend may come back to me if he wishes. I must clarify one comment that he made. The declaration that the assembly's decisions might be ultra vires in respect of a regulation applies not simply, as my right hon. Friend suggested, from the date of the court's decision, but from the date that the application was made.

The hon. Member for North Essex asked why that power is not available to all courts. I shall answer that question, and then deal with the points raised by my right hon. Friend.

We must recognise that the constitutional changes in this legislation and in the Scotland Bill demand innovative arrangements for settling disputes about the powers of the assembly or of the Scottish Parliament. Schedule 7 introduces the concept of "devolution issues" on which the assembly's use of its powers can be challenged. The assembly's subordinate legislation will be a matter for the assembly, but we accept that it should be subject to review by the courts.

As the hon. Member for West Dorset said, the position in England is different, because the Government could promote an Act of Parliament to cure the problem caused by a court's decision that subordinate legislation was ultra vires. That answers my right hon. Friend's point. However, the assembly would not be able to take such action, so clause 110 is a sensible response to the chaos that could otherwise reign if the assembly's subordinate legislation were found to be ultra vires.

The amendment is unacceptable because it fetters the courts' discretion in a way that could have undesirable and unforeseen effects for individuals. Therefore, I invite the hon. Gentleman to withdraw it.

Mr. Jenkin

The more I listen to the Minister trying to justify the clause as it stands, the less happy I become. In his argument, he declared that the clause was necessary to give the court the power to remove or limit retrospective effects of decisions, because the court has the power to declare invalid an order. That is the meat and drink of judicial review. That is what the courts do in many cases of judicial review when, for example, people are claiming payments—the right hon. Member for Llanelli (Mr. Davies) referred to Mr. Jones, but it could be Mr. Smith in London, or Mr. McTavish in Scotland. That has been the case for as long as there has been judicial review. There is no distinct justification for the clause, simply because that is what the court might do in this case.

The Minister says that it is necessary for the court to decide whether the payment should be made at all, whether it should be made from the date on which the application was made, or whether payment should be available to all litigants from the date of the promulgation of the order. That discretion does not exist in other courts. That is the extraordinary innovation that we are creating in the Bill and, as the Minister points out, in the Scotland Bill, in which we have not reached the relevant clause, so we have not yet raised the matter in that context.

Mr. Denzil Davies

Does the hon. Gentleman agree that the right way of dealing with the matter would be to give power to this House to overturn the retrospective effect of the court decision? I am sure that that could be done. My hon. Friend the Minister said that the problem arose because the Welsh assembly would not have legislative powers, but Parliament could do that, as it does now, from time to time.

Mr. Jenkin

The more I consider the matter, the more the logic of the right hon. Gentleman's argument is apparent. The entire clause should be removed from the Bill. This House is responsible for the legislation that we put through. If the court decides that the assembly is using powers that Parliament has not given it, it is a matter for this House to decide, along with the other place; it is not for some hybrid court in some hybrid decision to create extra powers for the assembly that this Parliament never intended.

Mr. Letwin

Does my hon. Friend agree that the critical difference between the provision as drafted and what is proposed by the right hon. Member for Llanelli (Mr. Davies), towards which my hon. Friend is clearly inclined, is that if Parliament were making the decision, it would be made on the basis of national interest—a political judgment, in the best sense—whereas the court is, so to speak, at sea? The court has no guidance on the basis on which it is to make a decision.

Mr. Jenkin

What would happen is what is beginning to happen in judicial review cases, where we might feel that the courts are becoming involved more in political issues. Political and judgmental arguments are increasingly being put to judges. The classic example in European law is the case of objective tests of justified or unjustified sexual discrimination, which are economic and political arguments, not matters of law. We think that courts should be concerned with matters of law, not with matters of economic and political judgment.

Another of the Minister's comments raises alarm. It makes me wonder whether such a provision will appear not only in the Scotland Bill, but in English legislation—whether it will pop up in other Bills where it is more convenient for the Executive to put the onus on the courts for mistakes of administration, than for the Executive to have to come to Parliament to seek powers to deal with the incompetence that they have demonstrated.

We shall withdraw the amendment for the time being—

7.45 pm
Mr. Alan Williams (Swansea, West)

Before the hon. Gentleman does so, may I make an appeal through him to my hon. Friend the Minister? He has got it wrong. I do not see why my constituents and his should be disadvantaged in the process through which law is made, as against constituents in England. Please, please take the clause away and bring back a different solution to the problem.

Mr. Jenkin

I shall give way to the Minister if he wishes me to do so.

The right hon Member for Swansea, West (Mr. Williams) makes clear the disadvantages. It is to the disadvantage of the citizens of Wales, as opposed to the citizens of the United Kingdom, that the provision appears in the Bill. I come back to the hill livestock compensatory allowances, for example. Why should a Welsh farmer be subject to the decision of a court or tribunal that can say, "Yes, Mr. Farmer, you are right. We should have paid you this amount of money, but we are under pressure from the Welsh assembly, which is in hot water over the matter, not to create a political crisis. For convenience, we will not pay you, and we will deny other farmers in the same position the right to apply for the same moneys. The courts in England are not subject to the same pressures, because they do not have the power to limit or remove retrospective effects"?

Mr. Hain

As in many other cases, when the hon. Gentleman or his colleagues have intervened on aspects of the Bill, he is creating a mountain out of a molehill. There is no intention to do anything of that kind. This is a sensible response—in the context of devolution, which is a new constitutional settlement for the United Kingdom—to deal practically with the issues raised by possible regulations that might be ultra vires.

Mr. Jenkin

I am grateful to the Minister for that intervention, because we have noticed a pattern of behaviour on his part. When we make points that he finds it difficult to answer, he thanks us for the courtesy and graciousness with which we have advanced our arguments, instead of just slagging us off, but when he comes back and says that we are making a mountain out of a molehill, we know that we have hit the jackpot and that he has run out of things to say.

I repeat that the Minister's justification for the clause is that the court or tribunal in these cases has the power to declare invalid an order. That is what courts do in judicial review cases. He says that it is not a matter of letting the assembly off the hook, but that is what the courts will be doing if they limit or remove retrospective effects. They will be making matters easier for the assembly, by saying to it, in effect, "Don't worry, you have been using a power that you did not have, but we will deal with the consequences for you." That would work to the disadvantage of ordinary people in Wales who were doing no more than claiming their rights under the law.

Mr. Alan Williams

In my days in government in the 1970s, I withdrew an order that was due to come before the House the following week because three people producing a particular version of a product—it was a consumer safety order—appeared. They had not been consulted, they should have been consulted and they would have had the right to take the Department to court because we had not gone through the proper processes. It was right that I withdrew the order, but if I were in the assembly, I could be told that it was wrong, but I could still go ahead and introduce the order, in the knowledge that there was a chance that the court might rescue me from the consequences of that action.

Mr. Jenkin

We can all think of cases. For example, when the Lambeth and Lewisham health authority was suspended in the early 1980s, and it was decided that that was ultra vires, what sort of pressure would a court be under in those circumstances, if the Secretary of State could make a case that the ultra vires nature of the order should not invalidate the suspension of the health authority? That is what I mean by the possibility of the provision letting the Executive off the hook.

I give notice that my noble Friends in the other place will want to return to the matter. We shall certainly raise the matter in the Scotland Bill, and keep a watching brief to make sure that the Government do not surreptitiously slip this constitutional innovation into other legislation for their own convenience.

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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