D003 | S019 | CV-25-00092151-0000 Mechanical extraction of the PDF’s existing text layer. No OCR performed. Reading order, stamps, handwriting, tables and symbols may be incomplete or inaccurate. Compare quotations with the unchanged original PDF; PDF page numbers refer to file pages, not necessarily printed page labels. Extraction is not court authentication or legal verification. PDF page 1 — text-layer available Court File No. ONTARIO SUPERIOR COURT OF JUSTICE B E T W E E N : CANLIFT EQUIPMENT LTD., 4C REAL ESTATE VENTURES INC., and PARTSROOM LTD. Plaintiffs – and – XUZHOU CONSTRUCTION MACHINERY GROUP IMP . & EXP . CO., LTD., XCMG NORTH AMERICA CORPORATION, XCMG CANADA LTD., XCMG AMERICAN RESEARCH CORPORATION, aka XCMG ARC CORPORATION, and XCMG AMERICA FINANCIAL LLC Defendants STATEMENT OF CLAIM TO THE DEFENDANTS: A LEGAL PROCEEDING HAS BEEN COMMENCED AGAINST YOU by the plaintiff. The claim made against you is set out in the following pages. IF YOU WISH TO DEFEND THIS PROCEEDING, you or an Ontario lawyer acting for you must prepare a statement of defence in Form 18A prescribed by the Rules of Civil Procedure, serve it on the plaintiff’s lawyer or, where the plaintiff does not have a lawyer, serve it on the plaintiff, and file it, with proof of service in this court office, WITHIN TWENTY DAYS after this statement of claim is served on you, if you are served in Ontario. Electronically issued / Délivré par voie électronique : 01-Oct-2025 Hamilton Superior Court of Justice / Cour supérieure de justice Court File No./N° du dossier du greffe : CV-25-00092151-0000 PDF page 2 — text-layer available 2 If you are served in another province or territory of Canada or in the United States of America, the period for serving and filing your statement of defence is forty days. If you are served outside Canada and the United States of America, the period is sixty days. Instead of serving and filing a statement of defence, you may serve and file a notice of intent to defend in Form 18B prescribed by the Rules of Civil Procedure. This will entitle you to ten more days within which to serve and file your statement of defence. IF YOU FAIL TO DEFEND THIS PROCEEDING, JUDGMENT MAY BE GIVEN AGAINST YOU IN YOUR ABSENCE AND WITHOUT FURTHER NOTICE TO YOU. IF YOU WISH TO DEFEND THIS PROCEEDING BUT ARE UNABLE TO PAY LEGAL FEES, LEGAL AID MAY BE AVAILABLE TO YOU BY CONTACTING A LOCAL LEGAL AID OFFICE. TAKE NOTICE: THIS ACTION WILL AUTOMATICALLY BE DISMISSED if it has not been set down for trial or terminated by any means within five years after the action was commenced unless otherwise ordered by the court. Date: October 1, 2025 Issued by: ________________________________ Local registrar Address of 45 Main Street East court office: Hamilton, Ontario L8N 2B7 TO: XUZHOU CONSTRUCTION MACHINERY GROUP IMP . & EXP . CO., LTD., No. 1 Industry District Xuzhou Economic Development Zone Jiangsu Province 221004 People’s Republic of China Electronically issued / Délivré par voie électronique : 01-Oct-2025 Hamilton Superior Court of Justice / Cour supérieure de justice Court File No./N° du dossier du greffe : CV-25-00092151-0000 PDF page 3 — text-layer available 3 AND TO: XCMG NORTH AMERICA CORPORATION Suite 403-B - 1013 Centre Road Wilmington, Delaware 19805 United States of America 5145 Schirlls Street Las Vegas, Nevada 89118 United States of America AND TO: XCMG CANADA LTD. #12 – 119 First Avenue Spruce Grove, Alberta T7X 2H4 8 Boulder Boulevard Stony Plain, Alberta T7X 1V7 100 Burland Crescent Hamilton, Ontario L8H 5Y4 AND TO: XCMG AMERICAN RESEARCH CORPORATION aka XCMG ARC CORPORATION c/o Shengnan Zhang Suite 100 - 1240 East Diehl Road Naperville, Illinois 60564 United States of America AND TO: XCMG AMERICA FINANCIAL LLC 650 North Sam Houston Parkway East Houston, Texas 77060 United States of America Electronically issued / Délivré par voie électronique : 01-Oct-2025 Hamilton Superior Court of Justice / Cour supérieure de justice Court File No./N° du dossier du greffe : CV-25-00092151-0000 PDF page 4 — text-layer available 4 CLAIM 1. The Plaintiff CanLift Equipment Ltd. (“CanLift”) claims: a.) a declaration that the “Distributor Agreement”, made amongst CanLift and the Defendant Xuzhou Construction Machinery Group Imp. & Exp. Co., Ltd. ( “XCMG China”), dated October 8, 2021, the collateral agreements made amongst CanLift and the Defendant XCMG North America Corporation ( “XCMG NA” ), dated July 7, 2021 and October 20, 2022 and (the “Rental Agreements”), and the parties’ relationship, are subject to the Arthur Wishart Act (Franchise Disclosure), 2000 (the “AWA”), as CanLift is a “franchisee” for the purposes of the Act, XCMG China is a “franchisor” for the purposes of the Act, and XCMG NA, XCMG Canada Ltd. (“XCMG Canada”), XCMG American Research Corporation, aka XCMG ARC Corporation ( “XCMG ARC” ), and XCMG America Financial LLC ( “XCMG America”) (collectively, the “XCMG Subsidiaries”) are “franchisor’s associates” for the purposes of the Act, b.) accordingly, a declaration that i.) clause 10 of the Distributor Agreement, and ii.) clause 16 of the Rental Agreements Electronically issued / Délivré par voie électronique : 01-Oct-2025 Hamilton Superior Court of Justice / Cour supérieure de justice Court File No./N° du dossier du greffe : CV-25-00092151-0000 PDF page 5 — text-layer available 5 are void and inoperative, as they purport to contract out of Ontario law, in deference to Chinese law and Nevada State law, respectively, contrary to section 10 of the AWA, c.) further, a declaration that clause 15 of the Distributor Agreement is void and inoperative, as it purports to bind the parties to arbitration before the China International Economic and Trade Arbitration Commission, sitting at Beijing, China, also contrary to section 10 of the AWA, d.) alternatively, a declaration that clause 15 of the Distributor Agreement must be read down, as follows: 15. Arbitration Any dispute arising from or in connection with this agreement shall be settled through friendly negotiation. If no settlement, the case shall be submitted to the China International Economic and Trade Arbitration Commission (Beijing) for arbitration , which shall be conducted in accordance with the Commission’s arbitration rules in effect at the time of applying for arbitration. In particular, the language of arbitration shall be Chinese and the place of arbitration shall be Beijing. The arbitral award is final and binding upon both parties, Electronically issued / Délivré par voie électronique : 01-Oct-2025 Hamilton Superior Court of Justice / Cour supérieure de justice Court File No./N° du dossier du greffe : CV-25-00092151-0000 PDF page 6 — text-layer available 6 e.) a declaration that clause 16 of each of the Rental Agreements is void and inoperative, as they purport to bind the parties to the exclusive jurisdiction of the courts of the State of Nevada, USA, sitting at Clark County, Nevada, contrary to section 10 of the AWA, f.) if the relief requested at subparagraph 1(c) is denied, and the relief at subparagraph 1(d) is granted: i.) an order referring the parties to arbitration with respect to the claims set-out at paragraph 3, below, pursuant to subarticle 8(1) of the UNCITRAL Model Law on International Commercial Arbitration) (the “Model Law” ) and subsection 5(1) of the International Commercial Arbitration Act, 2017, inclusive of CanLift, as well as XCMG China and all of the XCMG Subsidiaries (collectively, the “XCMG Defendants”), ii.) an order confirming the appointment of Colin L. Campbell, K.C. as CanLift’s selected arbitrator, and iii.) an order directing the Respondents to select an arbitrator within thirty days, pursuant to subarticle 11(3) of the Model Law, g.) in the alternative, if this Honourable Court declines to refer all of the aforementioned parties to arbitration, an order staying any arbitration in favour of this action, Electronically issued / Délivré par voie électronique : 01-Oct-2025 Hamilton Superior Court of Justice / Cour supérieure de justice Court File No./N° du dossier du greffe : CV-25-00092151-0000 PDF page 7 — text-layer available 7 h.) an order for costs relating to the foregoing, in an amount considered just and appropriate by this Honourable Court, and i.) such further and other collateral relief as counsel may advise, or as this Honourable Court may consider appropriate in the circumstances. 2. In any event, CanLift further claims , together with the Plaintiffs 4C Real Estate Ventures Inc. (“4C REV”) and Partsroom Ltd. (“Partsroom”): a.) an order expunging the registrations made against them by the solicitors for XCMG Canada and XCMG America, dated March 15, 2024, claiming bogus, non-existent general security agreement s in the Ontario Personal Property Security Registration System (the “PPSR”), b.) damages related to the aforementioned registrations , in an amount to be determined prior to trial, and c.) an order for costs relating to the foregoing, on a substantial indemnity basis, or, alternatively, in another amount considered just and appropriate by this Honourable Court. 3. If the relief at subparagraph 1(c) is granted, such that clause 15 of the Distributor Agreement is entirely void and inoperative, CanLift further claims: a.) $20,000,000 as damages, jointly and severally, Electronically issued / Délivré par voie électronique : 01-Oct-2025 Hamilton Superior Court of Justice / Cour supérieure de justice Court File No./N° du dossier du greffe : CV-25-00092151-0000 PDF page 8 — text-layer available 8 b.) an order requiring the XCMG Defendants to remove the unsellable XCMG inventory, at their own cost and expense, c.) an declaration that, after 30 days, CanLift shall be a “storer” for the purposes of the Repair and Storage Liens Act with respect to any of the Unsold XCMG Equipment that has not been removed at that time, inclusive of a storer’s right to compensation and a storer’s discretion to claim a lien, d.) an accounting, and an order for disgorgement, of any profits made in respect of products distributed in Ontario in breach of CanLift’s right to exclusivity, e.) an order for costs relating to the foregoing, in an amount considered just and appropriate by this Honourable Court, f.) interest, and g.) such further and other relief as counsel may advise and this Honourable Court may permit. The Parties 4. The Plaintiff CanLift is a company formed pursuant to the laws of the Province of Ontario, with a head office at Burlington, Ontario. It is in the business of selling, leasing, and servicing equipment for use in the construction industry, specializing in lift equipment and material-handling equipment. Electronically issued / Délivré par voie électronique : 01-Oct-2025 Hamilton Superior Court of Justice / Cour supérieure de justice Court File No./N° du dossier du greffe : CV-25-00092151-0000 PDF page 9 — text-layer available 9 5. The Plaintiff 4C REV is a company formed pursuant to the laws of the Province of Ontario for the purpose of owning the real property, where CanLift’s head office is located. It has absolutely no connection to any of the Defendants but for an improper PPSR registration made by the Defendants against it, as detailed below. 6. The Plaintiff Partsroom is a company formed pursuant to the laws of the Province of Ontario, and is currently inactive. It similarly has absolutely no connection to any of the Defendants but for the improper PPSR registration made by the Defendants against it, as detailed below. 7. The Defendant XCMG China is company formed pursuant to the laws of the People’s Republic of China, with a head office at Xuzhou, China. It is in the business of manufacturing machinery for use in the construction industry. 8. Directly or indirectly, XCMG China owns or controls all intellectual property in the “XCMG” brand, such as its logo and trademarks, including the following: These bear application numbers 2272354 and 2283666 in the Canadian Trademarks Database, with the latter also bearing the international registration number 1752579. Electronically issued / Délivré par voie électronique : 01-Oct-2025 Hamilton Superior Court of Justice / Cour supérieure de justice Court File No./N° du dossier du greffe : CV-25-00092151-0000 PDF page 10 — text-layer available 10 9. Clause 9 of the Distributor Agreement purports that all intellectual property rights are owned by XCMG China; and it purports to licence their use to CanLift. 10. The Defendant XCMG North America is a company formed pursuant to the laws of the State of Delaware, USA, with a head office at Las Vegas, Nevada, USA. It is a direct or indirect subsidiary of XCMG China, or otherwise fully controlled by XCMG China. 11. At all material times, XCMG North America acted as a distributor or vendor of parts required for CanLift to service the Distributor Agreement and the Rental Agreements, including for warranty work, where such products were distributed from the United States. 12. The Defendant XCMG Canada is a company formed pursuant to the laws of Alberta, with a head office at Edmonton, Alberta. It is a direct or indirect subsidiary of XCMG China, or otherwise fully controlled by XCMG China. 13. At all material times, XCMG Canada acted as a distributor or vendor of parts required for CanLift to service the Distributor Agreement and the Rental Agreements, including for warranty work, where such products were distributed from a point in Canada. 14. The Defendant, XCMG ARC Corporation is a company formed pursuant to the laws of the state of Illinois, USA, with a registered address in Naperville, Illinois, USA. It is a direct or indirect subsidiary of XCMG China, or otherwise fully controlled by XCMG China. Electronically issued / Délivré par voie électronique : 01-Oct-2025 Hamilton Superior Court of Justice / Cour supérieure de justice Court File No./N° du dossier du greffe : CV-25-00092151-0000 PDF page 11 — text-layer available 11 15. XCMG ARC acted as a conduit to address product quality issues, including, inter alia, logs of failures, service bulletins, and product improvements. It also participated in managing all warranty and service issues in Ontario and other regions of Canada. 16. The Defendant XCMG America is a company formed pursuant to the laws of the State of Delaware, USA, with a head office at Houston, Texas, USA. It is a direct or indirect subsidiary of XCMG China, or otherwise fully controlled by XCMG China. 17. The XCMG Defendants are partners, carrying on business with a view to profit, including, but not limited to, the allegations set out herein. They are partners at common law and pursuant to the Partnerships Act. Formation of The Distributorship Relationship 18. In about 2021, CanLift was approached by Sam Chen and Joe Jang, who were representatives of the XCMG Defendants. They had a letter stating they were authorized distributors for XCMG -branded MEWP (mobile elevated work platform) and other complimentary equipment in Canada. 19. Mr. Chen and Mr. Jang proposed that CanLift consider becoming a distributor of XCMG-branded equipment in Ontario. CanLift responded that it would prefer to deal directly with the XCMG manufacturer. 20. Discussions intensified and Mr. Chen and Mr. Jang introduced CanLift to Victor Jiang, the CEO of XCMG Canada. Electronically issued / Délivré par voie électronique : 01-Oct-2025 Hamilton Superior Court of Justice / Cour supérieure de justice Court File No./N° du dossier du greffe : CV-25-00092151-0000 PDF page 12 — text-layer available 12 21. During those discussions , Mr. Jiang specifically represented that XCMG equipment was all of good quality, CSA-compliant, and built to then-current 2021 regulations. 22. Mr. Jiang further represented that there would be full parts-distribution and quality- assurance support in Canada. 23. After a number of meetings, Mr. Jiang provided copies of the Dealership Agreement and the initial Rental Agreement for execution. 24. Without legal or other professional advice, CanLift signed them, in full reliance on Mr. Jiang’s representations. 25. Amongst other terms, CanLift would be the exclusive dealer for Ontario. 26. The parties ’ foresaw that CanLift would purchase approximately 100 pieces of equipment annually, with the goal of a 60% average fleet utilization. 27. CanLift would pay a royalty fee of 70% of the gross rental income for three years, with the remainder of the price paid at the end of the term if CanLift wished to acquire it. 28. Although the Distributorship Agreement and the Rental Agreements are expired on their face, the parties have continued to main their contractual relationship as franchisor, franchisors’ associates, and franchisee. 29. As recently as November 14, 2023, the XCMG Defendants e-mailed CanLift with new 2024 dealer pricing for MEWP and earthmoving equipment; in May 2024, they forwarded CanLift a new warranty policy and related documentation; and on August Electronically issued / Délivré par voie électronique : 01-Oct-2025 Hamilton Superior Court of Justice / Cour supérieure de justice Court File No./N° du dossier du greffe : CV-25-00092151-0000 PDF page 13 — text-layer available 13 13, 2024, they introduced CanLift to Michel Rheaume, a new vice -president for aftersales support, who would assist with ongoing concerns. 30. As detailed below, CanLift’s concerns were never addressed. No Disclosure Document 31. No disclosure document was ever provided to CanLift by any of the XCMG Defendants in accordance with section 5 of the AWA. 32. Neither was CanLift ever provided with any of the information prescribed by sections 2, 3, 4, 5, or 6 of the General Regulation made under the AWA, except for the information required by subsections 2(1), 6(9), and 6(12). 33. CanLift says that the lack of disclosure violated subsection 5(4)(a) insofar as material facts were withheld from it, including with respect to the recurring product defects and serial number tampering discussed below. Initial Start-Up Costs & Investment 34. For the purposes of section 5(7)(h) of the AWA and section 9(3) of the General Regulation, no initial start -up costs were specifically required by the XCMG Defendants. 35. In fact, the only initial start -up cost in the summer of 2021 was the cost of a single piece of equipment as a demo nstration and test piece, which was purchased by Electronically issued / Délivré par voie électronique : 01-Oct-2025 Hamilton Superior Court of Justice / Cour supérieure de justice Court File No./N° du dossier du greffe : CV-25-00092151-0000 PDF page 14 — text-layer available 14 CanLift from XCMG North America in May of 2021 with a 10% deposit . It was delivered in about July of 2021. 36. (At the outset, CanLift attempted to procure XCMG equipment from western Canada, but that equipment was found to be non-CSA compliant – an issue that later became more concerning and problematic, as discussed in more detail below.) 37. Over the balance of 2021, CanLift brought in approximately 90 units of XCMG equipment. At that time, all of the invoicing was made by XCMG North America, and payment was made to XCMG North America. 38. Later, some payments were made to XCMG Canada, for items that were sent from western Canada. XCMG North America continued to invoice and receive payments for items sent from the United States. 39. None of the equipment came directly form the XCMG manufacturing facility in China. 40. No payments were ever made to XCMG China, XCMG ARC, or XCMG America Financial. 41. Over time, CanLift’s investment increased considerably, particularly for inventory. The vast majority of which was acquired by mid-2023. 42. By about late 2023 and early 2024, quality and safety issues with the equipment began to become noticeably problematic, as particularized in more detail below. Electronically issued / Délivré par voie électronique : 01-Oct-2025 Hamilton Superior Court of Justice / Cour supérieure de justice Court File No./N° du dossier du greffe : CV-25-00092151-0000 PDF page 15 — text-layer available 15 Additional Costs 43. Over time – especially from late 2022 to late 2023 – CanLift underwent significant additional costs in accordance with its position as distributor, including, for example, inter alia: a.) the costs of advertising and attending trade shows, b.) a very large run -up in staffing, from about 25 to about 50 employees; including mechanics and service technicians to manage warranty issues and maintenance workload; including drivers to support higher equipment movement volumes; and expanding the sales an d rental teams in anticipation of growth in unit turnover (which ultimately did not occur due to equipment underperformance and customer dissatisfaction), c.) servicing warranty claims, far beyond what was expected, and without proper contribution for the parts, as set-out further below, d.) further to the foregoing, extensive hours were devoted to managing warranty workflows, supplier communications, and customer escalations — adding to overhead costs and reducing team efficiency, e.) concomitant renovations to add office space, f.) the cost of tractor -trailers, including a specialized heavy vehicle, for the transportation of certain XCMG equipment (which was never used, as set -out Electronically issued / Délivré par voie électronique : 01-Oct-2025 Hamilton Superior Court of Justice / Cour supérieure de justice Court File No./N° du dossier du greffe : CV-25-00092151-0000 PDF page 16 — text-layer available 16 further below), which was wasteful due to low utilization and recurring XCMG equipment breakdowns, and g.) freight, demurrage, and related expenses. Recurring Product Defects 44. By late 2022 and early 2023, CanLift began to recognize a very significant amount of failures, which were never disclosed to it. 45. These were generally for the same codes on the same machines. 46. CanLift says that the XCMG Defendants knew, or ought to have known about them, but that they were never disclosed. 47. These defects all ought to have been disclosed. 48. As examples, these defects have included, but are not limited to, the following: a.) all electric scissor lifts have defective breaks, which fail due to a defective drive motor; although the XCMG Defendants have sent new break kits , they are also failing, b.) hydraulic center posts seize up, affecting all hydraulic lines; machines affected including all booms other than the XGS158 model, c.) all electric scissor lifts have drive motor harness failures; wires rip off connectors due to poor quality, Electronically issued / Délivré par voie électronique : 01-Oct-2025 Hamilton Superior Court of Justice / Cour supérieure de justice Court File No./N° du dossier du greffe : CV-25-00092151-0000 PDF page 17 — text-layer available 17 d.) all boom lifts have the wrong conectors on safety limit switches and need to be replaced because they break off; the connector should be at a different angle to relieve the strain due to the tension, e.) all the main harness connectors on the booms need to be replaced; the wire pins are of pour quality and do not make a good connection ; this causes significant resistance such that the wires and pins in the harness connector heat up abnormally and melt, thus causing a short; when this happens, the machine loses all power and nothing works (including the emergency power), f.) the IMCT4050S has a controller failure, apparently due to a faulty resistor on the computer board; this stops all power to the machine, including the emergency power; at first, new controllers were sent to CanLift, but they proved to be equally defective such that the same problem would recur; later, the XCMG Defendants directed CanLift to replace the resis tors, but this was not possible to do safe ty concerns, as CanLift does not have an appropriate clean room for working on circuit boards,1 and 1 The XCMG Defendants have sent technicians to CanLift’s location to make the repairs (in CanLift’s workshop and not a proper clean room). However, there have been repeated failures, including one where a customer was stuck in the air for several hours. Electronically issued / Délivré par voie électronique : 01-Oct-2025 Hamilton Superior Court of Justice / Cour supérieure de justice Court File No./N° du dossier du greffe : CV-25-00092151-0000 PDF page 18 — text-layer available 18 g.) all the RT (rough terrain) scissor lifts need to have the drive, steer and break lines rerouted and replaced, as they rub against the steel , wear out, and fail, causing uncontrolled oil spills. Warranty Claims 49. No warranty claims process was set-out in the Distributor Agreement. 50. However, it was agreed by the parties that CanLift would provide the labour and XCMG would provide the parts. 51. Despite the foregoing, the XCMG Defendants have demanded that CanLift pay upfront for necessary parts and then to submit reimbursement claims. Many such claims are denied, such that CanLift is unable to recover costs that were due to the XCMG Defendants. 52. The number of denied claims is very considerable. It is a large majority of claims. 53. No satisfactory explanations for the denials have been provided. CSA Non-Compliance 54. In approximately late April or early May of 2022, CanLift discovered that the first approximately 90 pieces of equipment did not comply with 2021 CSA regulations. These pieces of equipment we manufactured to old outdated 2018 CSA regulations and so they were non-compliant. Electronically issued / Délivré par voie électronique : 01-Oct-2025 Hamilton Superior Court of Justice / Cour supérieure de justice Court File No./N° du dossier du greffe : CV-25-00092151-0000 PDF page 19 — text-layer available 19 55. CanLift parked the machines, raised the issue with the XCMG Defendants, and requested an explanation. 56. No proper explanation was ever provided. 57. Although the XCMG Defendants did take a return of the machines, they resisted repayment to CanLift for the expenditure; and they sought to apply depreciation o n the non-compliant machines. Serial Number Tampering 58. The XCMG Defendants have regularly, and improperly, replaced the serial plates. 59. This has been done on new, unsold machines to make them appear as the current model year, so that they may be sold without a discount. 60. This has even been done on the non-CSA-compliant machines that CanLift returned to the XCMG Defendants. 61. The tampering issue was first discovered when CanLift received a box of serial plates with a 2024 manufacture date on them. Upon inspection, some of the machines were already in CanLift’s rental fleet with 2023 manufacture date s; and others were for units in stock at the XCMG Defendants’ own warehouse and holding yard. 62. The 2021 non -CSA compliant machi nes that CanLift had returned had some parts replaced, along with the new serial plates to suggest that they were 2024 CSA compliant. These units we never retested to certify the m as such. The serial plates Electronically issued / Délivré par voie électronique : 01-Oct-2025 Hamilton Superior Court of Justice / Cour supérieure de justice Court File No./N° du dossier du greffe : CV-25-00092151-0000 PDF page 20 — text-layer available 20 did no specify that they had a retrofit done (as required for CSA compliance) and they had removed the original 2021 manufacture date on the plate. 63. The XCMG Defendants were engaged in similar wrongdoing elsewhere in Canada. 64. In order to investigate the issue, CanLift purchased four units from British Columbia. On inspection, they were all derived from the lot that CanLift had returned in 2021 for CSA non-compliance. 65. CanLift later received a decoding tool for XCMG serial numbers, which allows it to identify the year of manufacture. On the inspection of 60 units, CanLift found 27 units to be showing the wrong manufacture date. 66. CanLift has raised the issue with the XCMG Defendants, but they have not properly responded to it. The Unsold XCMG Inventory 67. Due to the issues addressed above, CanLift’s XCMG inventory is effectively unsellable, and potentially dangerous. 68. CanLift is unable to put any new equipment into the marketplace. 69. The unsold XCMG inventory consists of approximately 486 pieces (the “Unsold XCMG Inventory”), including idle equipment in CanLift’s yard and rented equipment. Electronically issued / Délivré par voie électronique : 01-Oct-2025 Hamilton Superior Court of Justice / Cour supérieure de justice Court File No./N° du dossier du greffe : CV-25-00092151-0000 PDF page 21 — text-layer available 21 Misrepresentations & Breaches of Duties of Fair Dealing & Good Faith 70. CanLift says that the forgoing constitutes b reaches of the duty of fair dealing contained in section 3 of the AWA, including breaches of duty to act in good faith in accordance with reasonable commercial standards. 71. CanLift also relies on the general common law concerning misrepresentation and breach of contract; and it says that the XCMG Defendants have acted in bad faith in carrying out their contractual obligations. Breaches of Exclusivity & Lack of Notice re Same 72. The XCMG Defendants no longer advertise CanLift as a dealer, but they continue to demand that CanLift perform warranty repairs and to pay royalties. 73. Since about 2024, the XCMG Defendants have directly, or via affiliates, licenced other distributors to sell and lease equipment in Ontario, in breach of the exclusivity entitlement. 74. These other apparent licensees have included JS Equipment Solutions Inc. , CXMC Equipment Sales Ltd., and Elvaan Equipment Solutions, at different times. 75. Also at the material times, the XCMG Defendants, directly, or via affiliates, sold equipment to purchasers in Ontario, in breach of CanLift’s exclusivity entitlement, by auctions and online sales, the particulars of which are known to the Defendants and not to CanLift. Electronically issued / Délivré par voie électronique : 01-Oct-2025 Hamilton Superior Court of Justice / Cour supérieure de justice Court File No./N° du dossier du greffe : CV-25-00092151-0000 PDF page 22 — text-layer available 22 76. CanLift says that the se breaches of the exclusivity entitlement in Ontario, and the practice of selling equipment directly to the Ontario marketplace, constituted material changes for the purposes of subsection 5(5) of the AWA. However, no statement of material change, or other notice, was ever provided. Dealer Demands 77. In late April 2024, many of XCMG’s largest dealers in Canada, including CanLift and others, held a meeting in Edmonton Alberta, which was the centre of operations for the XCMG Defendants in Canada. 78. The dealers styled themselves as the “Canadian Dealer Council” . The Council sent a letter to the XCMG Defendants outlining several concerns and requesting an “urgent” meeting. The concerns specifically included, inter alia , issues regarding product quality, the insufficient supply of parts, and problems with the warranty -claims system. 79. As noted above, Mr. Rheaume was introduced as a point -person to address the dealers’ concerns. However, he never substantively addressed any of them. Bogus PPSA Registrations 80. No security agreement was ever entered into amongst CanLift and the XCMG Defendants. 81. Despite the foregoing, on about March 15, 2024: Electronically issued / Délivré par voie électronique : 01-Oct-2025 Hamilton Superior Court of Justice / Cour supérieure de justice Court File No./N° du dossier du greffe : CV-25-00092151-0000 PDF page 23 — text-layer available 23 a.) XCMG Canada – via their solicitors, Cassels Brock & Blackwell LLP – improperly filed notice of a bogus general security agreement with a floating charge against CanLift in Ontario’s PPSR, claiming an interest in “(“GOODS AND INVENTORY”). ALL PRESENT AND AFTER ACQUIRED INTA NGIBLES, INCLUDIGN WITHOUT LIMITTION ACCOUNTS AND ACCOUNTS RECEIVABLE, RELATING TO THE GOODS AND INVENTORY . ALL DEEDS, DOCUMENTS, WRITINGS, PAPERS, BOOKS OF ACCOUNT AND OTHER BOOKS RELATING TO OR BEING RECORDS OF THE SALE OF INVENTORY OR THE PROCEEDS THEROF INCLUDING, WITHOUT LIMITATION, ANY COMPUTE PROGRAMS, DISCS AND SOFTWARE CONTAINING OR PERTAINING TO THOSE RECORDS” , and b.) XCMG America – via their solicitors, Cassels Brock & Blackwell LLP – similarly improperly filed notice of a bogus general security agreement with a floating charge against CanLift in Ontario’s PPSR, claiming an interest in “ALL PRESENT AND AFTER ACQUIRED GOODS AND INVENTORY SOLD OR OTHERWISE SUPPLIED TO THE DEBTOR BY XCMG AMERICA FINANCIAL LLC (“XCMG”) OR AN AFFILIATE OF SCMG, OR THE ACQUISITION OF WHICH IS FINANCED BY XCMG” . 82. Further to the foregoing, on about June 6, 2024, without notice to CanLift, XCMG Canada, XCMG America “and their respective affiliates” , proposed to CanLift’s prior- secured lenders, the Bank of Nova Scotia and Roynat Inc., to execute an “Acknowledgement and Confirmation” to subordinate their interests to those of the XCMG Defendants. Electronically issued / Délivré par voie électronique : 01-Oct-2025 Hamilton Superior Court of Justice / Cour supérieure de justice Court File No./N° du dossier du greffe : CV-25-00092151-0000 PDF page 24 — text-layer available 24 83. 4C and Partsroom were listed as co -debtors with CanLift for certain of the registrations that the XCMG Defendants sought to subordinate. 84. The lenders immediately notified CanLift of XCMG’s proposal. 85. Thus, in about the first week of June 2024, CanLift demanded rectification of the issue, such that the registrations be removed. 86. XCMG has declined to make the correction. 87. Thus, the bogus registrations remain on the PPSR to the date of pleading. Damages 88. The full extent of CanLift’s damages is not yet known. However, the damages include, inter alia, the following: a.) lost equipment rental income due to quality and safety issues, b.) lost equipment sales due to quality and safety issues, c.) loss of inventory value for CanLift’s inventory of XCMG equipment, d.) increased operating expenses, e.) increased repair and warranty expenses, f.) increased freight to service defective equipment in the field, Electronically issued / Délivré par voie électronique : 01-Oct-2025 Hamilton Superior Court of Justice / Cour supérieure de justice Court File No./N° du dossier du greffe : CV-25-00092151-0000 PDF page 25 — text-layer available 25 g.) freight, demurrage, and other related expenses which were incurred by CanLift and not compensated, h.) lost opportunity costs, and i.) such further and other damages as will be particularized prior to, or at, trial. Authority for Claims 89. Without limiting any of the foregoing, CanLift specifically relies upon, inter alia: a.) the AWA, b.) the Partnerships Act, c.) the Model Law, d.) the International Commercial Arbitration Act, 2017, e.) the Personal Property Security Act, f.) the Repair and Storage Liens Act, g.) the Rules of Civil Procedure, h.) the common law, and i.) the inherent jurisdiction of this Honourable Court. Electronically issued / Délivré par voie électronique : 01-Oct-2025 Hamilton Superior Court of Justice / Cour supérieure de justice Court File No./N° du dossier du greffe : CV-25-00092151-0000 PDF page 26 — text-layer available 26 90. With respect to the joint liability of the XCMG Defendants, without limiting the foregoing, CanLift specifically relies upon sections 7 and 8 of the AWA , section 2 of the Partnerships Act, and the common law. Procedure 91. CanLift proposes that this action be tried at Hamilton, Ontario. Date: October 1, 2025 LOOPSTRA NIXON LLP Richmond-Adelaide Centre 130 Adelaide Street West Toronto, Ontario, M5H 3P5 Alan S. Cofman (LSO #51910T) Telephone: 289-805-0864 E-mail: acofman@LN.law David Laurie (LSO #85544V) Telephone: (289) 212-3531 E-mail: dlaurie@LN.law Lawyers for the Plaintiffs Electronically issued / Délivré par voie électronique : 01-Oct-2025 Hamilton Superior Court of Justice / Cour supérieure de justice Court File No./N° du dossier du greffe : CV-25-00092151-0000 PDF page 27 — text-layer available CANLIFT EQUIPMENT LTD. et al. vs XUZHOU CONSTRUCTION MACHINERY GROUP IMP. & EXP. CO., LTD., et al. (Plaintiffs) (Defendants) Court File No. ONTARIO SUPERIOR COURT OF JUSTICE Proceeding commenced at HAMILTON STATEMENT OF CLAIM LOOPSTRA NIXON LLP Richmond-Adelaide Centre 130 Adelaide Street West Toronto, Ontario, M5H 3P5 Alan S. Cofman (LSO #51910T) Telephone: 289-805-0864 E-mail: acofman@LN.law David Laurie (LSO #85544V) Telephone: (289) 212-3531 E-mail: dlaurie@LN.law Lawyers for the Plaintiffs Electronically issued / Délivré par voie électronique : 01-Oct-2025 Hamilton Superior Court of Justice / Cour supérieure de justice Court File No./N° du dossier du greffe : CV-25-00092151-0000