CLTL -

Should you deem a forklift as unsafe to operate during your Lifting Device Inspection (LDI) activity, I would think you have both a moral and legal obligation to tag the equipment out of service and most likely you could be held liable for any incident that occurred from failure to do so.

I would recommend you tag the forklift out of service and notify the employer who is using the forklift as well as your employer of the unsafe equipment to protect yourself from any future civil/criminal liability or personal Ontario OHSA fine/order (citation). Make sure you document your action, dates, times. persons notified, and equipment defects and keep a record for yourself (CYA).
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The following Ontario OHSA regulation applies to you as an employee:

Occupational Health and Safety Act, Revised Statutes of Ontario (R.S.O.) 1990, CHAPTER O.1

Duties of workers

28. (1) A worker shall,

(a) work in compliance with the provisions of this Act and the regulations;

(b) use or wear the equipment, protective devices or clothing that the worker's employer requires to be used or worn;

(c) report to his or her employer or supervisor the absence of or defect in any equipment or protective device of which the worker is aware and which may endanger himself, herself or another worker; and

(d) report to his or her employer or supervisor any contravention of this Act or the regulations or the existence of any hazard of which he or she knows.
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If the forklift you are working on is leased, rented, or on loan from your employer, etc. the following Ontario OHSA regulation applies to your employer:

Occupational Health and Safety Act, Revised Statutes of Ontario (R.S.O.) 1990, CHAPTER O.1

Duties of suppliers

31. (1) Every person who supplies any machine, device, tool or equipment under any rental, leasing or similar arrangement for use in or about a workplace shall ensure,

(a) that the machine, device, tool or equipment is in good condition;

(b) that the machine, device, tool or equipment complies with this Act and the regulations; and

(c) if it is the person's responsibility under the rental, leasing or similar arrangement to do so, that the machine, device, tool or equipment is maintained in good condition.
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You can discuss violation reporting with:
Ontario Ministry of Labor
Occupational Health and Safety Inquiries
Province-wide: 1-800-268-8013 (Ontario Only)