9 Such a short period rate is not a pro rata proportion of an annual premium, but is a rate charged for policies where the insurer is on risk for only a short period of time. It is understandable that an insurer would charge a different rate of premium if it were on risk for a period of, say, one month than it would charge if it were on risk for a period of, say, one year.
10 In the present case, the premium for the policy had not been paid, but there is no dispute that the plaintiff is required to pay the amount which the insurer would be entitled to retain under the clause if the premium had been paid.
11 In my view, the defendant is entitled under the clause to retain the amount which is its customary short rate proportion of the premium. The defendant kept a Short Rate Premium Calculation Table for policies of this description. For policies which were in force for periods of 102 to 108 days, the percentage of total premium charged as a short rate premium was 48 per cent. That was its customary short rate proportion of the premium.
12 The plaintiffs' broker gave evidence that he knew he could obtain the information as to what was the defendants' short rate proportion by making inquiry of the defendant. He says he believed that that would be the pro rata proportion. One wonders, if that were so, why an inquiry would be necessary. But on this application I will assume that that was his belief. Such a belief is irrelevant to the construction of the policy.
13 It was also argued that the policy should not be construed in such a way that the insurer had a discretion as to what premium it would charge, or could charge premium of an amount which would be unknown to the insured. In my view, that argument was misconceived. Under the policy, the defendant does not have a discretion. It can only charge according to what is its customary rate at the time of a cancellation. That is a matter of objective fact. It is a fact ascertainable on inquiry.
14 The plaintiff submitted that it need only show that a dispute as to the proper construction of the clause exists and that the grounds for that dispute were real and were not merely spurious, hypothetical, illusory or misconceived (Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd (1997) 76 FCR 452). I was referred to the oft-cited passage from the judgment of Barrett J in Solarite Air Conditioning Pty Ltd v York International Australia Pty Ltd [2002] NSWSC 411 at [23]:
"[23] The tests of 'plausible contention requiring investigation', 'real and not spurious, hypothetical, illusory or misconceived' and 'perception of genuineness (or lack of it)', applied in the context of a summary procedure where 'it is not expected that the court will embark on any extended inquiry', mean that the task faced by a company challenging a statutory demand on the 'genuine dispute' ground is by no means at all a difficult or demanding one. The company will fail in that task only if it is found upon the hearing of its s459G application that the contentions upon which it seeks to rely in mounting its challenge are so devoid of substance that no further investigation is warranted. Once the company shows that even one issue has a sufficient degree of cogency to be arguable, a finding of genuine dispute must follow. The court does not engage in any form of balancing exercise between the strengths of competing contentions. If it sees any factor that, on rational grounds, indicates an arguable case on the part of the company, it must find that a genuine dispute exists, even where any case apparently available to be advanced against the company seems stronger."
15 It was submitted for the plaintiff that in order to show the dispute was genuine, it was sufficient to show that the dispute as to the meaning of the clause was one which was arguable.
16 In Delnorth Pty Ltd v State Bank of New South Wales (1995) 17 ACSR 379, Cohen J said (at 384-385):
" Section 459H(1) refers to the court finding that there is a genuine dispute. The parties have argued this case on the issue of whether the proper construction of the agreement and the facts results in the plaintiff owing money to the defendant. The facts were not in dispute and there was thus no question of whose evidence would be accepted on a final hearing. Under the previous legislation, when there was a claim that there was a bona fide dispute on substantial grounds as to the debt claimed, the court could decide that dispute if it arose from a question of law or was of short compass. See, for example, Offshore Oil NL v Acron Pacific Ltd (1984) 2 ACLC 8.
I consider that under the provisions of the Corporations Law, the same approach can be taken. Although questions of disputed fact will not be decided on an application to set aside a statutory demand, the issue of whether there is a genuine dispute can be resolved on that application where the question arises on a short point of law or the construction of documents or agreed facts. In Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785; 12 ACLC 669, McLelland CJ in Eq said that the expression 'genuine dispute' connotes a plausible contention requiring investigation. Where no further investigation is required, I consider that the court on an application under s 459 g may decide as a matter of law if there is a genuine dispute. The occasions when this is possible may be few, but in my view this is one of them ."