D009 | S288 | VLC-S-S-260999

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PDF page 1 — text-layer available
IN THE SUPREME COURT OF BRITISH COLUMBIA
Date: 20260904
Docket: S260999
Registry: Vancouver
Between:
Ryan Martin, Timothy Martin, John McMaster, Wild Timber Industries Ltd.,
Artic Rents Ltd., Citra Logistics Ltd., Seaton Forest Products Ltd.,
1350387 B.C. Ltd., and 1356262 B.C. Ltd.
Plaintiffs
And
XCMG Canada Ltd., XCMG North America Corporation,
XCMG America Financial, LLC., Victor Jiang, Paul Bechard, Terri Fodchuck,
Casey Guay, Gengzong Qiu, Joseph Bellanca, also known as Joe Bellanca,
Saiyinjirigala Batochir, also known as Sain Li, Christopher Li, also known as
Chris Li, Michel Rheaume, ANT Rentals Ltd., Bo Zhou, and
Michael Langston, also known as Mike Langston
Defendants
Before: The Honourable Justice Crerar
Oral Reasons for Judgment
In Chambers
Counsel for the Plaintiffs: A.S. Cofman
M.M. Chinneck
No other appearances
Place and Date of Trial/Hearing: Vancouver
September 4, 2026
Place and Date of Judgment: Vancouver
September 4, 2026

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Martin v. XCMG Canada Ltd. Page 2
[1] THE COURT:  I am satisfied that notwithstanding the grief it may inflict upon
you, there is enough prima facie evidence of breaches of the existing court orders.
[2] I say court orders because there was a formal ex parte order issued on March
11th. That was followed by the inter partes hearing of March 25th.
[3] Regrettably, there was not sufficient time on March 25th to finalize specific
terms of the order in this complicated matter.
[4] I was confident that counsel, based upon the tone in the March 25th hearing,
would be able to put the fine strokes on what was a general agreement with broad
terms that were confirmed and ordered by the court on March 25th. I was also
cognizant of the complicated corporate interplay between the defendant companies
and idiosyncrasies of the equipment business in which they are engaged, such that
there may be necessary nuances to the wording of the order with respect to
restrictions on trade by the defendant companies.
[5] I was also respectful and cognizant that the broad objective of complete
transparency with respect to the defendants' transactions pending the resolution of
this matter would have to be achieved through specific forms of disclosure, and that
there may be forms of disclosure that would be more logistically practical to both
parties that would nonetheless achieve the objective of complete transparency. I left
the details of the order to the negotiations of counsel. It was anticipated, of course,
that counsel would continue their constructive discussions and finalize that order
within weeks of the March hearing.
[6] It appears that two things occurred. Neither of these, of course, I point to as
some sort of blame, but rather as an explanation for why this has drifted, and why
we find ourselves in September without an order finalized for the March hearing.
[7] The first is that there was an anticipated return in June of this year, which
return date was later put over until November. It was likely that the parties
anticipated that any remaining quibbles about the specific forms of the order could
have been resolved in June. And then it just fell off the table. The other thing that

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Martin v. XCMG Canada Ltd. Page 3
appears to have happened is that lead counsel for the defendants I take it is now on
maternity leave, and there has been a wholesale change of counsel from the
Toronto office of Cassels to the Vancouver office of Cassels.
[8] In any case, by way of preamble with respect to the specific order that I am
considering today, I will be issuing a directive that the parties crystalize the proposed
forms of order. And I anticipate finalizing those terms some time this month.
[9] That all said, the broad strokes of the order and indeed some detail of the
order was already settled on March 25, 2026. Among those terms was:
1. That there be a payment of $5 million of security by the defendants as a
counterbalance.
2. There would be complete transparency with respect to the defendants'
transactions between March 25th and the resolution of this matter, either
through trial or variation or settlement, through extensive comprehensive
transparent disclosure.
[10] That there would be a payment in of $5 million and that there would be
disclosure that would achieve the goal of complete transparency.
[11] The defendants have now brought this ex parte application for further relief. It
is regrettable that this application, like all ex parte applications, is indeed ex parte.
Although I do have the compelling argument from the plaintiffs that had they
provided notice to the defendants, there would be further and perhaps accelerated
breaches of the two existing orders.
[12] In the course of today's proceedings, on the court's encouragement, the
plaintiffs have presented a draft form of order. The draft form of order largely reflects
the terms of the March 11th order, as well as the critical points of the March 25th
order that were agreed to by the parties and ordered by the court.
[13] The one point of controversy is the increase of the security to be paid by the
defendants from the existing $5 million to a further $10 million, as a reassurance to

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Martin v. XCMG Canada Ltd. Page 4
the court and the defendants, and as a price for their continued permission to carry
out business in the ordinary course of business.
[14] I am satisfied on the material before me that the plaintiffs have raised prima
facie breaches of the existing orders such as to justify a requirement for an
increased security order. I will not recite this evidence in detail, and I will rely in
some large part on the questions that I have posed in the course of this hearing with
respect to the reliability of the evidence.
[15] I would start by recounting the evidence that we heard in the earlier March
hearings. Again, I granted the freezing order on my review of the evidence. That
review of the evidence led to the conclusion, as I set out in paragraph 14 of my
March 11th reasons for judgment, that the evidence established improprieties quite a
bit stronger than the typical factual substratum on which a Mareva order is based.
The evidence supported prima facie fraudulent conduct: that those ostensibly
dishonest transactions that were not only a fraud on the plaintiffs but on the
marketplace in general:
[10] The first is an orchestrated, long-term strategy to swap out decals or
plates on various items of heavy machinery manufactured and distributed by
the defendants, such as to misrepresent the age of the products. In short,
XCMG passed off older products as newer products. This is not simply
window-dressing but has significant financial consequences with respect to
the depreciation in value. It also raises safety concerns. These are, for the
most part, heavy industrial pieces of equipment raising significant Workers
Compensation Board and general worker safety issues.
[11] As a related alleged fraud with direct consequences to the corporate
plaintiffs as well as other similarly situated distributors, the misdating or
redating of the equipment resulted in greater exposure with respect to
warranty obligations by those distributors as well as other financial
consequences.
[12] Second, the claim alleges that the plaintiffs would not have made these
direct and indirect advances with respect to the business carried out between
its related company Artic and the XCMG entities, had they known the extent
of the alleged XCMG frauds, and had XCMG entities not made
misrepresentations about the extent and nature of those frauds, and, finally,
had XCMG not reassured them that all was above-board can that any
discrepancies would be rectified. The plaintiffs argue that the total damages
are still difficult to quantify precisely, but they have come up with estimated
aggregate losses of $32.546 million.

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Martin v. XCMG Canada Ltd. Page 5
[16] In the March 25th hearing, we also canvassed various examples of prima
facie dishonesty in the affidavits provided by the defendants. For example, there
were examples given of deeply discounted listings through Ritchie Bros.
Auctioneers. When confronted by that, the defendant affiant claimed, somewhat
implausibly, that that listing made after the freezing order had been delivered had
been made in error, and had it been accepted, then they would not have proceeded
with the transaction. There were other examples of dishonest sworn statements
provided in the March hearing.
[17] In the new evidence today, there are several examples of breaches of one
term of the March 25th order. Specifically, in order to preserve the status quo and to
prevent dissipation of assets, the parties agreed and the court confirmed that the
defendants would not be permitted to sell any equipment at more than a 5 percent
discount from its book value. I have been provided with several examples of sales
after the March 25th order, with sale figures considerably in excess of the 5 percent
reduction maximum.
[18] I have also been presented with evidence that a document, which I will refer
to as "document 58," was produced as part of the extensive and transparent
disclosure ordered by the court. The initial version of document 58 showed a
reversed transaction on March 20th --- that is, after the initial freezing order --- for
$1.67 million. The evidence also establishes that at a later date, document 58,
showing that transaction, was swapped out to a shorter and more benign version of
that document that wipes off everything before May 28th and specifically wipes off
the $1.67 million transaction.
[19] Finally, I would note that the disclosure that has been provided by the
defendants is miles from the word and spirit of the March 25th order that would
require broad and near comprehensive disclosure to achieve transparency in all of
the market transactions of the defendants. The documents disclosed have been
unparticularized. They are out of date order. They cannot be moved or arranged to
allow for ready processing. I take it they have been given over in a digital form that

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Martin v. XCMG Canada Ltd. Page 6
does not allow copying and pasting. This is far from the balanced agreement that
was reached on March 25th and that was ordered by the court on broad and specific
terms on that date.
[20] The last thing I would highlight is a discrepancy that is set out in Mr. Martin's
fifth affidavit with respect to the relationship between the XCMG defendants and a
corporation called Essex. It highlights not only the defendants’ misleading
statements with respect to the relationship between the two companies, but also with
respect to a potential prima facie sale that is well below the 5 percent threshold as
ordered on March 25th.
[21] Accordingly, I am going to agree to the request of the plaintiffs to increase the
amount of the deposit. I am not going to increase it as much as sought. And so
accordingly I am going to change the draft paragraph 4(d), from $10 million to $5
million such that the effect will be $10 million in total.
“Crerar J”