Federal Court of Australia

True EV Distribution Pty Ltd v Shenzhen Xiaopeng Motors Supply Chain Management Co Ltd (No 4) [2026] FCA 1200

ORDERS

THE COURT ORDERS THAT:

1.    The applicants’ interlocutory application dated 19 August 2026 be dismissed.

2.    The applicants pay the respondents’ costs of that interlocutory application.

3.    In relation to the lump sum assessment of the costs of the proceedings:

(a)    the respondents file and serve any affidavits and written submissions (limited to four pages) by 10 September 2026;

(b)    the applicants file and serve any affidavits and written submissions (limited to four pages) by 24 September 2026;

(c)    the respondents file and serve any affidavits and written submissions (limited to two pages) in reply by 1 October 2026; and

(d)    the assessment of the lump sum order for costs be determined on the papers.

4.    The applicants have leave, nunc pro tunc, to further amend their amended interlocutory application dated 31 March 2026 to include in paragraph 1 of that application (as “Confidential Documents”) each of the “Confidential Documents” as defined in paragraph 1 of the Court’s order made on 30 March 2026.

5.    The respondents file and serve forthwith:

(a)    the respondents’ submissions dated 26 March 2026;

(b)    affidavit of Shuhua (Marty) Wang affirmed on 23 March 2026 and its exhibit, “MW-2”;

(c)    affidavit of Shuhua (Marty) Wang affirmed on 20 March 2026 and its exhibit, “MW-1”;

(d)    affidavit of Peter Edmund Cash affirmed on 20 March 2026 and its exhibit, “PEC-1”;

(e)    affidavit of Thomas Haihuan Wang affirmed on 20 March 2026;

(f)    affidavit of Hidesuke Takesue affirmed on 20 March 2026;

(g)    affidavit of Jie (Elsa) Zhang affirmed on 20 March 2026;

(h)    affidavit of Alex (Yachao) Li Tang affirmed on 20 March 2026 and its annexure, “AT-1”; and

(i)    affidavit of Jiaming (James) Wu affirmed on 20 March 2026.

in the form of those documents as they appear in exhibit “PEC-8 Confidential” to the affidavit of Peter Edmund Cash affirmed on 26 June 2026, but with the redactions therein made in black and not grey.

6.    The following documents are discharged from the Court’s order made on 30 March 2026:

(a)    affidavit of Peter Edmund Cash affirmed on 27 March 2026 and its exhibit, “PEC-3”;

(b)    the redacted versions of the documents filed and served in accordance with paragraph 6 of this order; and

(c)    Federal Court transcript of proceedings on 30 March 2026 in the form in which it appears at tab 8 of exhibit PEC-8 to the affidavit of Peter Edmund Cash affirmed 26 June 2026, but with the redactions therein made in black and not grey.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

Delivered ex tempore

JACKMAN J:

1    On 12 August 2026, I dealt with an interlocutory application filed by the respondents (XPeng) seeking dismissal of the proceedings pursuant to s 56(4) of the Federal Court of Australia Act 1976 (Cth) and r 19.01(c) of the Federal Court Rules 2011 (Cth) (FCR) for failure by the applicants (True EV) to pay the second tranche of security for costs by 31 July 2026 of $628,430 which I ordered on 30 April 2026: True EV Distribution Pty Ltd v Shenzhen Xiaopeng Motors Supply Chain Management Co Ltd (No 3) [2026] FCA 1136. I was persuaded not to order dismissal of the proceedings by an affidavit of Mr David Mathews, a finance broker for True EV. Mr Mathews referred to a plan with a single investor to fund the second tranche of security from the proceeds of an asset sale which had been completed on 10 August 2026, as well as a back-up plan with two other investors.

2    Senior counsel for True EV proposed a self-executing order whereby if the second tranche was not provided by 10am on 19 August 2026, then the proceedings would be dismissed. The orders which I made (and which were entered on 12 August 2026) were as follows:

1.    Unless the solicitor for the applicants files and serves an affidavit deposing to the fact that by 10 am on 19 August 2026 the applicants have paid into court the second tranche of security for costs of $628,430, the proceedings will be dismissed with costs (including reserved costs) at 10 am on 19 August 2026, such costs to be assessed by lump sum order.

2.    The applicants pay the respondents’ costs of today.

3.    The proceedings be listed for case management on 20 August 2026 at 9.30 am.

3    True EV has failed to provide the second tranche of security and has not filed the affidavit required by order 1. Accordingly, the proceedings were dismissed yesterday with costs.

4    By interlocutory application dated 19 August 2026, True EV seeks the following orders:

1.    Order 1 dated 12 August 2026 be vacated.

2.    Order 2(b) dated 30 April 2026 with respect to the payment of the second tranche of the security in the sum of $628,430 be varied such that that payment deadline is amended from 31 July 2026 to 3 September 2026.

5    The interlocutory application is brought pursuant to r 39.04(2) or r 39.05(c) of the FCR. Rule 39.04 provides relevantly:

(1)    The Court may vary or set aside a judgment or order before it has been entered.

(2)    If an interlocutory application for the setting aside or variation of a judgment or order is filed within 14 days after the judgment or order is entered, the Court may determine the application, and (if appropriate) set aside or vary the judgment or order under subrule (1), as if the judgment or order had not been entered.

6    As this application was filed within 14 days of the orders of 12 August 2026 being entered, the power under r 39.04(2) is enlivened. There is no need to consider whether the order is interlocutory within the meaning of r 39.05(c).

7    The application is supported by the affidavit of Mr Simon Wakim of 19 August 2026, and the affidavit of Mr David Mathews of 20 August 2026.

8    Taking Mr Mathews’ affidavit first, he says that the second tranche of funding was expected to be deposited with the Court on 17 or 18 August 2026. He has been in communication with True EV and the drawdown was progressing according to his expectation. He refers to a conversation in the afternoon of 17 August 2026 with a representative of True EV, Mr Woolley, in which Mr Woolley referred to having received a Notice of Proposed Termination (the Notice) of True EV’s Distributor Agreement with XPeng, and Mr Woolley stated that if the Distribution Agreement were terminated, then True EV would not have any source of income. Mr Woolley apparently said that he alerted Mr Mathews to that issue so that investors for the second tranche of security for costs could make an informed decision prior to the drawdown. Reference was made to an expectation of further disputation with XPeng on the issue, which appears to have been a reference to the proposed termination of the Distribution Agreement. Mr Mathews has not seen the Notice because of confidentiality issues.

9    Mr Mathews says that it is his understanding that True EV’s business consists substantially of the distribution of XPeng vehicles and parts under the Distributor Agreement, and that revenue from that distribution is the principal source from which the second tranche is expected to be repaid. In the absence of any challenge in cross-examination, I accept that that is Mr Mathews’ understanding, although it is plainly an incorrect understanding.

10    Mr Mathews does not appear to be aware that True EV has not purchased any motor vehicles from XPeng for distribution and sale in Australia pursuant to the Distribution Agreement since June 2025, and has ceased to operate a sales and service network for the sale of XPeng vehicles. Moreover, Mr Mathews does not appear to be aware that on 17 July 2026, a month before the Notice was issued by XPeng to True EV, True EV made a public announcement to the effect that it had closed its Sydney Flagship Experience Centre in Mascot as the lack of vehicle supply had made it impossible to continue operating a showroom. The announcement by True EV said that True EV has continued to fulfil customer parts orders and remains committed to assisting customers where possible during this transition, and says that if people are enquiring about the availability of genuine XPeng parts or wish to place a parts order, then they should contact True EV’s parts team. Mr Wood SC, who appears for True EV, accepts that knowledge of the announcement by True EV on 17 July 2026 would have killed off the appetite of investors to fund the second tranche.

11    Returning to Mr Mathews’ affidavit, he gives evidence that the assessment on which the investors for funding the second tranche of security agreed to participate, as he presented it to them, was based on True EV’s ability to continue trade under its arrangements with XPeng, including the import and sale of vehicles and parts, and did not take account of any threat to the Distributor Agreement. I interpolate that the announcement by True EV of 17 July 2026 would have undermined that basis if it had been brought their attention.

12    Mr Mathews considered that, as the person who arranged the second tranche and who acts for the investors in doing so, he should bring to their attention any matter coming to his knowledge that was material to the advance, and should not allow them to advance funds on the basis of information which he knew to be incomplete, and he did not regard it as open to him to proceed to drawdown funds without doing so. Accordingly, Mr Mathews says that at various times on 17 August 2026 his spoke with, and attempted to speak with, multiple second tranche investors and told them, in substance, that XPeng had taken steps through the Notice that may materially affect True EV’s capacity to trade and consequently meet the requirements of the funding agreement. He told them that he was unable to provide a copy of the Notice and that they should obtain their own independent legal and financial advice, and asked each of them to confirm as a matter of urgency whether they wished to proceed. Mr Mathews says that he expects to receive final instructions by Monday or Tuesday next week, following which he expects that payment into the Court’s account will follow within two business days of that occurring. He says that in the unlikely event that the current investors elect not to proceed, he has already commenced briefing a further alternative investor although he does not expect that that will be necessary.

13    I do not regard Mr Mathews’ affidavit as establishing any reasonable likelihood of the second tranche of security being provided. Potential investors in funding that second tranche would have to be told about True EV’s announcement on 17 July 2026, and that True EV’s only remaining business and revenue concerns the supply of spare parts. There is no evidence as to how much revenue or profit that business activity is likely to produce, but I accept Mr Wood’s concession that knowledge of the 17 July 2026 announcement would have killed off the appetite of investors to fund the second tranche.

14    The affidavit of Mr Wakim pertains to an alternative source of funding the second tranche of security. Mr Wakim’s evidence is that he has been trying to arrange short-term car finance to fund the second tranche of security using a Porsche motor vehicle owned by a company of which he is a director. There are two Personal Property Securities Register (PPSR) registrations in relation to that vehicle secured by a company in the Nissan group. In addition, Mr Wakim refers to five XPeng vehicles which True EV purchased outright, which also have PPSR registrations against them. Mr Wakim says that he has instructed his solicitors to commence urgent proceedings seeking discharge of the PPSR registrations for those six motor vehicles, and anticipates that the application can be finalised in a few days and that the matter could be heard in the following week or two. If and when orders are made discharging the PPSR registrations, Mr Wakim says that he could then obtain immediate funding for car loans to raise $190,000 in relation to the Porsche, and $500,000 in relation to the five XPeng cars. Mr Wakim says that any remaining balance of the amount of security for costs would be funded from his personal savings.

15    Mr Wakim refers to the Notice issued by XPeng on 17 August 2026. The recitals to that Notice refer to the fact that True EV has not purchased any motor vehicles from XPeng for distribution and sale in Australia, pursuant to the Distribution Agreement since June 2025, and has ceased to operate a sales and service network for the sale of XPeng vehicles. The recitals also refer to the public announcement by True EV on 17 July 2026 to which I have referred earlier. Mr Wakim does not contradict any of the facts set out in the recitals to the Notice, and positively states (consistently with the 17 July 2026 announcement) that True EV presently supplies spare parts pursuant to the Distributor Agreement. Mr Wakim says that the Notice has affected True EV’s ability to trade, but does not refer expressly to the announcement made by True EV on 17 July 2026 which confined its business to the sale of spare parts. Mr Wakim does say that XPeng ceased providing XPeng motor vehicles to True EV in about October 2025, and that True EV’s ability to trade has been affected due to the limited availability of cars. Mr Wakim says that, as approval of True EV’s litigation funding is dependent on the income that can be generated from the Distribution Agreement, True EV has encountered difficulties in funding the full amount of security for costs, hence the delay of the payment of the first tranche and the current delay of the second tranche.

16    Mr Wood submits that the issue of the Notice led directly to the funding of the second tranche of security for costs being temporarily withheld. I do not accept that submission. The submission does not take into account the announcement by True EV itself on 17 July 2026 to the effect that its only continuing business with XPeng products was for the sale of spare parts. That does not appear to have been disclosed to any of the potential funders of the second tranche of security who, according to Mr Mathews’ evidence, have been under the misapprehension that True EV is still conducting a business of selling XPeng vehicles. I do not regard the Notice as having had any material causative impact on the provision of the second tranche of security. There is no realistic prospect of True EV attracting third-party funding for the second tranche of security in light of what the 17 July 2026 announcement conveys in relation to True EV’s relative lack of revenue and business prospects, which (whether or not known before now to the potential funders) stem from its decision on 17 July 2026 to continue only as the seller of spare parts.

17    Moreover, Mr Wakim’s inability to provide funding for the second tranche of security is not causally related to the Notice at all, and relates to circumstances which could have been readily ascertained with reasonable diligence before the orders of 12 August 2026 were made.

18    In those circumstances, I do not regard there as having been a material change of circumstances since the orders of 12 August 2026.

19    True EV has been on notice of the risk of dismissal of these proceedings since 30 April 2026, and was acutely conscious of that prospect from 12 August 2026. True EV was late in paying the first tranche of security, and ultimately did so only a day or two before the hearing of XPeng’s previous application to dismiss the proceeding. XPeng submits, and I accept, that it will be prejudiced if it is required to continue to accumulate legal costs that are looking increasingly irrecoverable against impecunious applicants, and in proceedings now imposing a very substantial drain on the resources of the Court. XPeng submits, and I accept, that the circumstances of this case are analogous to those summarised by Sarah C Derrington J in Sunshine Energy Australia Pty Ltd v Youssef [2023] FCA 189 at [47]:

The applicants have had sufficient time and notice to organise their financial affairs to enable them to comply with the order for security for costs. They have not done so, nor have they provided any reasonable or plausible explanation for their delay. It is pellucid that they do not have the means to fund the proceedings and their contumelious disregard of the orders of the Court demonstrate little intention of prosecuting those proceedings in accordance with the overarching purpose of civil practice and procedure provisions of this Court.

20    Accordingly, in all the circumstances, True EV has not established a sufficient basis to set aside or vary the orders of 12 August 2026 and 30 March 2026.

Associate:

Dated:    20 August 2026