The owner of one of Bradford’s newest businesses is involved in an ongoing legal battle with an ex-business partner worth more than $23 million.
Andrey Andreev and his brother, Angel Andreev, are the director and officer as well as owner and inventory manager, respectively, of Ontario corporation 2696214 as well as the owners of Best Brands Stores and Best Auction, now TK Home and TK Auction, which hosted a grand opening at 44 Bridge St. on Nov. 9.
The Bradford store marked the thirteenth location for TK Home since starting out about 1.5 years ago, right around the time in early April 2023 when their joint venture went sour with Taryn Kylie (TK) Rainford, owner of TK Liquidation and Auction Limited since October 2013.
Both businesses sell discounted overstock items from major retailers, available in their own retail locations or via online auctions.
As part of a lawsuit, both sides claim the other misrepresented and/or misused funds and assets, and both claim the rights to the “TK Home” brand, under which their joint venture opened four stores starting in December 2022.
Rainford said she reached out about the lawsuit after seeing the article about the grand opening, because she’s worried the Andreevs might take advantage of others the way she claims they did her.
“I wouldn’t want anyone else to go through what I went through. That was terrible,” she said.
In a statement of claim filed with Ontario’s Superior Court of Justice in November 2023, Rainford claims she and her business suffered “extensive” losses, had to borrow $200,000 and was nearly forced into bankruptcy as a result of funding the joint venture after the Andreevs’ business failed to pay for merchandise, deposit proceeds from sales, or contribute to the joint venture’s employee wages and overhead including utilities, rent, snow removal and upkeep of the locations.
“I was completely gutted,” she said.
Rainford explained she was trying to help the Andreevs with their business, and in the process risked losing her own, which could have left her 50 or so employees jobless.
“I was very trusting. I gave them the keys to my kingdom and they took a lot from us,” she said. “I felt like I let all my people down.”
Luckily, Rainford said her business was able to bounce back, but she’s still needed to spend an “unhealthy” amount of time dealing with a “very frustrating” legal process, and is wary of ever entering into another partnership.
“Trusting someone else — I don’t think I could do it again,” she said. “It was a nightmare.”
As a result, Rainford is seeking $13 million in damages related to breach of contract, breach of confidence, breach of fiduciary duty, unjust enrichment, copyright infringement, trademark infringement, and more, plus the costs of court proceedings and any payment due from the joint venture.
Among other things, she’s also seeking to have the joint venture officially terminated and have the court declare the Andreevs violated the Trademarks Act and conducted their business in a manner that is oppressive, unfairly prejudicial, and unfairly disregarding of Rainford’s business.
Rainford is also seeking permanent injunctions preventing the defendants from operating their current businesses, preventing them from using trademarks “confusingly similar” to Rainford’s, preventing them from passing off their goods or services as those of Rainford's, or even claiming to be associated with Rainford.
Andrey declined to comment for this article, but in a statement of defence filed Feb. 23, the Andreevs deny the claims against them and are asking the action be dismissed, as they claim Rainford hasn’t provided sufficient evidence. They also claim a demand for particulars and a request to inspect documents was served to Rainford to determine the accuracy of claimed damages, but she hasn’t answered.
Rainford said everything was handled through her legal counsel.
Meanwhile, the same filing includes a counter claim from the Andreevs seeking $10.5 million in damages related to negligence, breach of contract, breach of trust, breach of fiduciary duty, theft, oppression, misappropriation and more, plus the costs of court proceedings and any payment due from the joint venture.
Among other things, they also want their business declared the owner of the TK Home trademark, Rainford’s business to produce financial records for 2022-2024, a full account of the funds and assets belonging to the joint venture, the repayment of all funds unlawfully removed from the joint venture by Rainford or her business, and for her business to make payment for the $700,000 worth of their merchandise they claim she retained despite being paid for by the joint venture.
In addition to everything else, both parties are also seeking forensic copies of each other’s electronic devices.
When asked, Rainford denied the claims against her.
None of either party’s allegations have been tested in court and no date has been set for the proceeding.
How it started and what went wrong
According to court documents, the parties differ on most of the specifics, but they do agree that the Andreevs approached Rainford about a collaboration, with Rainford’s business providing merchandise to the Andreevs’ business, which began in late spring or summer 2022.
In November, both parties began discussing a joint partnership and by the end of the month they had entered into an agreement for Rainford’s business to contribute $2 million of capital with the Andreevs’ business to contribute $500,000.
As a result, the profits from the joint venture were to be split 70/30 in Rainford’s favour, with her business expected to provide merchandise and for the Andreevs’ business to sell it in the four locations opened under the joint venture’s TK Home branding in December in Hamilton, Burlington, Brantford and Aurora.
Almost right away there were problems, according to court documents.
Rainford claims her business had to finance the joint venture for the first few months, and when she did start invoicing, it either failed to pay or was late due to insufficient funds.
As a result, Rainford claims her business had to cover the joint venture’s costs for rent, utilities, sales terminals, advertising, software, logistics and equipment.
By February 2023, Rainford allegedly discovered that Andrey was withdrawing “significant funds and assets” from the joint venture, through which both Andrey and Rainford had signing authority to a joint account with TD Bank.
However, the Andreevs refute those claims and instead allege they handled all the marketing and that Rainford did not fund the joint venture’s operational costs, which instead came from sales in store and on the website. They also claim Rainford failed to deposit proceeds from the Brantford store’s online auction into the joint account.
They further claim that Rainford’s business was supplying the joint venture with deadstock (products that can’t be sold, either because no one wants them or because they’re damaged and/or expired) from the Brantford store, and continued to send more even after the Andreevs requested a decrease in supply until they were ready to order more.
While the Andreevs say they did continue to pay for merchandise, they also claim Rainford’s business was improperly invoicing them with inflated amounts and “constantly” removing funds from the joint account without their knowledge, which left the joint venture without enough funds to cover operating expenses.
At the same time, they claim Rainford’s business was selling the joint venture’s inventory to third parties and keeping the proceeds.
Court documents show those disagreements led to a meeting between the partners on Feb. 28, in which Rainford claims they discussed the “significant” debt she had taken on to maintain the venture, and the Andreevs claim they confronted Rainford about discrepancies in the accounting and inventory systems.
Both parties agree that led to a meeting with the joint venture’s accountant, Jessie Goossens of Thompson Goossens Accountants LLP, on March 1.
During the meeting, Rainford claims Goossens voiced “significant reservations” about funds unaccounted for and the venture being “on the brink” of bankrupting Rainford, and suggested Rainford’s business needed to submit any outstanding invoices and “demand” payment.
However, the Andreevs claim Goossens pegged the missing funds at $100,000.
The fallout
While Rainford claims both parties agreed the joint venture would bring its account with her business into good standing, she alleges that didn’t happen.
Instead, she accuses the Andreevs of paying out wages which weren’t due, including to their own wives, removing the joint venture’s funds and assets to create their own competing business called “popupop” and never reimbursed the joint venture.
Rainford goes on to accuse the Andreevs of failing to account for the joint venture’s retail transactions, properly deposit funds or assets, and follow recommendations made by Goossens.
As a result, Rainford claims the parties agreed to terminate the joint venture in April 2023, but since then the Andreevs have continued using the TK Home branding as their own without permission or licence from Rainford, who alleges the name is “confusingly similar” to her own brand, TK Liquidation and Auction, and an infringement on her trademark which misrepresents the two brands as being associated.
However, the Andreevs claim Rainford attempted to terminated the joint venture unilaterally, without meeting contractual requirements, and while they say both parties discussed the matter, they never agreed to the termination.
Despite this, they allege Rainford sent a message to the Andreevs on April 1 stating the joint venture was terminated and “immediately” had Andrey removed from the joint bank account in addition to denying the Andreevs access to the joint venture's accounting and inventory system.
In terms of the brand name, the Andreevs claim Rainford had no registered trademark for “TK,” “TK Home” or “TK Auction” and the common law rights were only held by the joint venture until she acted to terminate it, and its use of the name ended.
They further argue that the “TK Home” trademark is currently in use by the Andreevs’ numbered corporation and that Andrey owns the copyright to the design, as he originally proposed the name and created the logo.
The Andreevs deny operating in a way that would cause confusion between the two businesses, which operate in different municipalities from each other.
Rainford also alleges the Andreevs used her business’s proprietary information — including inventory, pricing and client lists — to start their own business as TK Home, but the Andreevs claim they use their own pricing and client database, and further allege that Rainford used their online auction subscriber list to grow her own business.
