Background
True EV and related applicants brought proceedings against XPeng entities. The Court had ordered True EV to provide a second tranche of security for costs of $628,430. On 12 August 2026, after previously declining immediately to dismiss the proceedings, the Court made a self-executing order: unless the security was paid and an affidavit filed by 10 am on 19 August, the proceeding would be dismissed with costs.
True EV did not provide the security. It applied on 19 August to set aside the operative order and extend the payment deadline to 3 September. Its evidence relied on prospective third-party funding affected by XPeng’s 17 August notice proposing termination of the distributor agreement, and an alternative proposal to obtain finance secured over vehicles once PPSR registrations were discharged.
The Court’s Holding
Justice Jackman dismissed the application. Although the Court had power under r 39.04(2) of the Federal Court Rules 2011 (Cth) to consider setting aside or varying the 12 August order because the application was filed within 14 days of entry, True EV had not shown a sufficient basis to exercise that power.
The evidence did not establish a reasonable likelihood that the second tranche would be funded or a material change in circumstances since 12 August. Potential investors had apparently believed that True EV continued to sell XPeng vehicles, but True EV had publicly announced on 17 July that it had closed its showroom and was continuing only with spare-parts supply. The Court found that the termination notice had no material causal effect on the funding shortfall, while the alternative vehicle-finance proposal depended on circumstances that could have been identified earlier. The applicants were ordered to pay the respondents’ costs of the interlocutory application, with the overall costs to be assessed by lump sum on the papers.
Key Takeaways
- A self-executing dismissal for failure to provide security for costs will not readily be set aside without persuasive evidence of a material change in circumstances.
- Proposed litigation funding must rest on an accurate account of the applicant’s business and revenue prospects.
- Late-stage, contingent finance arrangements and unpursued asset-based funding may not justify further extensions where an applicant has had ample notice of the security obligation.
Why It Matters
The decision underscores the Federal Court’s willingness to enforce security-for-costs orders where an impecunious party cannot demonstrate a realistic means of meeting them. It also highlights the prejudice to respondents of continuing to incur potentially unrecoverable costs, and the Court’s concern with proceedings that impose substantial demands on its resources.
For litigants seeking relief from an automatic dismissal, an asserted financing disruption is not enough: the evidence must show a genuine, causally relevant change and a realistic prospect that security will promptly be provided.