Former Deutsche Bank Securities Limited bond trader, Steven Fleckenstein, has lost an appeal against a trial court order dismissing his action for alleged breach of his severance agreement.

The severance agreement between Fleckenstein and Deutsche Bank Securities, required his former employer to pay him “a discretionary special payment of $400,000.” At the time, Deutsche Bank made its severance offer, it was obliged to pay Fleckenstein $400,000 by way of bonus. Deustche Bank contended, and the trial judge agreed, that the $400,000 mentioned in the severance agreement referred to that bonus amount.

At trial, Fleckenstein submitted evidence about his understanding of the severance agreement, including evidence of several conversations with a Deutsche Bank representative in New York after he accepted the offer. He said that he inquired into payment of the $400,000 and was advised that no further amount of $400,000 would be paid because he had received his bonus.

The bank representaive testified that there were two such conversations — the second being a conversation in which he advised Fleckenstein that he had received his $400,000 and that the “discretionary special payment” referred to in the severance package and the bonus were one and the same. The bank officer testified that Fleckenstein then laughed and said “I had to try.” Fleckenstein denied making this comment.

“In my view, the trial judge made no reversible error in using extrinsic evidence to seek out the parties’ intentions,” wrote Madam Justice Saunders of the BC Court of Appeal in her decision. “The task for the trial judge was to construe the written contract. The trial judge found here that Mr. Fleckenstein realized Deustche Bank intended the $400,000 payment commitment in the letter of January 24, 1998 to refer to the bonus ‘and took a series of careful steps to try and place himself in a position from which he could argue a more favourable interpretation’”.

The BC Court of Appeal sympathized with Fleckenstein over the ambiguity of the severance agreement. “I am not unmindful of the imperfect language of the severance agreement and the fact that it was drawn by Deutsche Bank, two factors which could suggest that Deustche Bank should be stuck with the consequences of its own inexactitude. Had the trial judge found, which she did not, that Mr. Fleckenstein relied upon his different understanding of his employer’s intentions, I would think otherwise, and doubly so if the severance agreement also reduced his entitlement under the termination provisions of his employment agreement. But this is not the case. The trial judge concluded that Mr. Fleckenstein knew Deutsche Bank’s position on the payment.”