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Test for court order permitting collateral use

This book was written by Michael Dew, a Vancouver lawyer who practices civil litigation, including assisting persons who have been denied insurance coverage by insurance companies, and persons dealing with builders lien issues.
Statement of the general test: balancing of interests
The onus of establishing that the implied undertaking should be relaxed in a particular case will be on the party seeking the modification, and it is necessary to establish that the interests of justice favour disclosure:
An application to modify or relieve against an implied undertaking requires an applicant to demonstrate to the court on a balance of probabilities the existence of a public interest of greater weight than the values the implied undertaking is designed to protect, namely privacy and the efficient conduct of civil litigation…What is important in each case is to recognize that unless an examinee is satisfied that the undertaking will only be modified or varied by the court in exceptional circumstances, the undertaking will not achieve its intended purpose.
(Juman v. Doucette, 2008 SCC 8 at para. 32).
[T]he test will require that the applicant demonstrate that the evidence is relevant and that any prejudice to be suffered by the examinee is clearly outweighed by the legitimate interest in disclosure.
(British Columbia v. Tekavec, 2012 BCSC 1348 at para. 17).
Information sought must be relevant before undertaking will be relaxed
The court will not relieve a party from the implied undertaking in order to access material that is not relevant to the action in which that information is sought to be used:
Where a court order is sought to relieve against the implied undertaking, the applicant will have the onus of satisfying the court on a balance of probabilities that the interest to be advanced through the sought-after disclosure is greater than the values that underpin the rationale for the implied undertaking. Central to the analysis will be a careful consideration of any prejudice that will be caused to the party who initially provided the material at issue. Of course, it goes without saying that the material must be relevant to the issues in the action in which the disclosure is sought.
(British Columbia v. Tekavec, 2012 BCSC 1348 at para. 11).
In Balderston v. Aspin, 2011 BCSC 730, a claim for injuries arising out of a motor vehicle accident, the plaintiff agreed to disclose medical records and examination for discovery transcripts from the previous action, but refused production of documents related to the settlement of the previous action and refused to allow defence counsel general access to ICBC’s file from the previous claim. Noting that the defendant was unable to articulate how the information it sought access to might be relevant, the court agreed with the position taken by the plaintiff:
In my view, the defendant’s application is unnecessary given the plaintiff’s position on disclosure of the transcript, medical records and pleadings. The plaintiff is justified in resisting any request for production of the records of the mediated settlement. As the plaintiff argues, the trier of fact ultimately adjudicating this claim is not bound by the mediated settlement when making an award for damages.
Again, the defence does not identify what documents contained in the ICBC internal file might be relevant to this claim. Such things as the adjuster’s notes; statements of the respective parties; correspondence to and from counsel involved would not appear to have any relevancy to this action.
The defendant is requesting the authorization from the plaintiff to search the file and see what might be discovered. Such a process is a classic example of the prohibited fishing expedition.
(Balderston v. Aspin, 2011 BCSC 730 at para. 47-49).
Guidance as to balancing of interests
Where the interests counting against disclosure are substantial, such as the right against self incrimination (as was the case in Juman), court ordered modification of the implied undertaking will only be granted in rare circumstances. But such cases will occur, just as exceptions will be made to legal advice privilege in certain circumstances:
If public safety trumps solicitor-client privilege despite a measure of injustice to the (unsympathetic) accused in Smith v. Jones, [1999] 1 S.C.R. 455 it can hardly be disputed in this jurisdiction that the implied undertaking rule would yield to such a higher public interest as well.
(Juman v. Doucette, 2008 SCC 8 at para. 33).
However, in cases where the interests counting against disclosure are less compelling, modification of the implied undertaking may be ordered more frequently:
[W]here discovery material in one action is sought to be used in another action with the same or similar parties and the same or similar issues, the prejudice to the examinee is virtually non-existent and leave will generally be granted. 
(Juman v. Doucette, 2008 SCC 8 at para. 35).
In my opinion the onus of establishing special reasons under Rule 27(25) is not a heavy one; an order for production of a discovery transcript from another action should be almost automatic, provided it is established that there is sufficient connection between the two actions, by the parties, their interests and the broad issues between them, so that it can be said that the actions are related.  The overall question is whether the evidence given by the witness at discovery in the earlier action, may have some bearing or relevance, directly or indirectly, on the evidence he may give in the second action.  Any doubt in this regard, in my view, should be resolved in favour or the applicant, provided there is no evidence that substantial detriment or injustice will be done to the witness, and which in most cases will be unlikely. Even then restrictions on the use of the transcript in most cases should reduce any detriment or injustice to the witness, to the extent that the balancing of the competing interests will come down in favour or the party seeking to use the transcript.
(Scuzzy Creek Hydro & Power Inc. v. Tercon Contractors Ltd., 1998 CanLII 5684 at para. 20 (BCSC)).