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The word orignated in Sydney years ago around the North Shore and seems to have spread Australia wide in a matter of years. There is a suburb named Chatswood in Sydney, the word was first used by a small group of individuals from the North Shore who had a disliking for a group of individuals from Chatswood. So if you were trying to offend your Shorey mate, you would call him Chat, or if you saw something shit, ugly etc, you would call it chat.
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