Executive Summary: Key Legal and Evidentiary Issues

• Whether the lawful board of CRG consisted of the two-person "Nasberg Board" (Nasberg and Krohn) or the full five-member Board (Rapkin, Huber, Jenkala, Nasberg and Krohn) was the central question.
• Validity of the shareholders' meetings Nasberg purported to call on February 18, March 13 and April 8, 2026 turned on whether proper notice was given under The Corporations Act.
• Allegations that Nasberg misappropriated CRG funds and engaged in unauthorized financial and promotional conduct underpinned the Board's decision to terminate him.
• Disputes over the authenticity of a March 10, 2025 resolution said to record the resignations of Rapkin and Huber required findings on credibility and document fabrication.
• Huber's status as a director depended on interpreting the written-consent requirement in CRG's By-Law No. 1.
• Nasberg's entitlement to an oppression remedy was assessed against the reasonableness of his expectations and the availability of alternative legal redress.

Facts of the case

Benjamin Nasberg founded Carbone Restaurant Group Ltd. ("CRG"), a Manitoba corporation operating as a fast-food franchise. At an Annual General and Special Meeting on December 28, 2023, the number of directors was increased to five, and Nasberg, Lorne Rapkin, James Huber, Harvey Jenkala and Kris Krohn were elected. Nasberg ran day-to-day operations as President and controlled CRG's bank accounts, while Rapkin chaired the Audit Committee. CRG was pursuing a "going public transaction" (a proposed IPO) on the Nasdaq exchange and had begun the confidential SEC registration process by August 2025. According to Rapkin, no formal Board meeting was held between December 28, 2023 and December 3, 2025, though informal board-level discussions continued.

Through Board meetings on December 3 and 31, 2025 (which Nasberg and Krohn did not attend) and discussions among the other directors, the Board developed serious concerns about CRG's finances and Nasberg's conduct. The alleged misconduct included unremitted tax liabilities ($82,780.52 in outstanding GST/HST and $512,274.75 in outstanding payroll remittances), an unauthorized loan of $250,000.00 USD at roughly 32% interest from Agile Capital Funding LLC (with more than $206,000.00 USD transferred out of CRG's account by month's end), repeated transfers of deposited funds out of CRG's accounts shortly after receipt, inaccurate filings listing Nasberg as sole director, and an unauthorized "pre-IPO" marketing campaign run through Visionary Growth Fund that falsely advertised a Walmart partnership and prompted a lawsuit by Major Foods Group. The year-end 2024 financial statements showed liabilities exceeding assets by $2 million. On January 16, 2026, the Board terminated Nasberg's employment for just cause and elected a new slate of officers, with Percy Wiredu as President and CEO. Disputing his removal, Nasberg requisitioned and then purported to hold shareholders' meetings on February 18, March 13 and April 8, 2026 to remove Rapkin, Huber and Jenkala and confirm a two-person "Nasberg Board," while also relying on a March 10, 2025 resolution said to record the resignations of Rapkin and Huber and arguing, in the alternative, that Huber had never validly become a director.

Corporate and statutory provisions at issue

Several instruments framed the dispute. Section 4.05(b) of CRG's Amended and Restated General By-Law (By-Law No. 1) provided that a person becomes a director if they either (i) consented in writing to act or (ii) acted as a director pursuant to the election or appointment; the court read this as disjunctive, so attendance at meetings was not required to hold office. Nasberg's executive employment agreement permitted termination for just cause, which the Board invoked. The notice and requisition provisions of The Corporations Act, C.C.S.M. c. 225 governed the validity of Nasberg's meetings — sections 129(6) and 137(2), which require a requisition to state the business in sufficient detail for shareholders to form a reasoned judgment; section 129(1)(b), requiring notice to directors; and section 139(2), giving the court discretion to make "any order it thinks fit" to cure a defective notice.

The court's reasoning and analysis

The court declined to validate Nasberg's meetings. He admitted that, contrary to s. 129(1)(b), his January 26, 2026 notice (for the February 18 meeting) was not sent to the directors or to all shareholders; at least four shareholders — Greg Hoffman's Cap Mines (holding 1 million shares), Eva Marie Dajer Portoreal, Boston Crust and Dollinger — received no notice. Finding that Nasberg had not acted in good faith and had deliberately bypassed the sitting directors, the court refused to use its s. 139(2) discretion to cure the defects, distinguishing Dumont v. Manitoba Metis Federation Inc. (2004 MBCA 149), where procedural departures had advanced enfranchisement, from Nasberg's deliberate disenfranchisement of shareholders and directors. The notice was also substantively misleading because it did not disclose that Nasberg's employment had been terminated for alleged financial misconduct and illegal advertising, while he continued to hold himself out as President and CEO. The February 18 meeting and its resolutions were declared a nullity, and the March 13 and April 8 meetings carried the same defects. On the resignation issue, the court found the alleged March 10, 2025 resolution to be a fabrication: Rapkin and Huber denied resigning, and Jenkala denied signing or recalling it. Huber was found to have acted as a director continuously since December 2023, satisfying By-Law 4.05(b) regardless of written consent, so quorum existed at the December 3 and 31, 2025 and January 16, 2026 meetings. The court further flagged unresolved "cap table" problems — parties entitled to unissued shares (Cap Mines, Anita Bealer and Rapkin), unexplained allocations of 1,000,000 shares to Nasberg and a related company and 250,000 shares to his father, Larry Nasberg, and an apparent reallocation of CCFP shares away from Dollinger and Yikes Inc. — concluding that no shareholders' meeting could be validly convened until these were resolved. On oppression, the court held the claim must fail: the Board had acted responsibly and lawfully in CRG's interests, the directors' duty runs to the corporation rather than to an individual shareholder, and the planned pro rata offering allowed existing shareholders to maintain their proportionate stake, consistent with Shefsky v California Gold Mining Inc (2016 ABCA 103). Nasberg's expectation of retaining his board seat and employment after his misconduct was not objectively reasonable, and under Brar v Brar (2018 MBCA 87) the oppression remedy is not a substitute for legal rights where adequate redress — here, a wrongful dismissal action — is available.

Ruling and outcome

The court concluded that the Board of CRG lawfully consists of Rapkin, Huber, Jenkala, Nasberg and Krohn, dismissed the application in its entirety, and set aside the injunction. The respondents — Carbone Restaurant Group Ltd., Lorne Rapkin, James Huber, Harvey Jenkala, Percy Wiredu and Kris Krohn — were the successful parties, and the application was dismissed with costs. The decision states no specific dollar figure, so the amount of costs is not specified in the ruling.