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Crown Liability and Proceedings Act
The Crown Liability and Proceedings Act (the Act) permits actions to be commenced against the federal Crown, including torts, but only on terms specified within the Act. Without the legislation, actions against the Crown are prohibited in common law. Section 9 of the Act provides that:
- No proceedings lie against the Crown or a servant of the Crown in respect of a claim if a pension or compensation has been paid or is payable out of the Consolidated Revenue Fund or out of any funds administered by an agency of the Crown in respect of the death, injury, damage or loss in respect of which the claim is made. 
This section is intended to bar actions against the Crown in situations where an individual is already receiving a federal pension or other form of federal compensation as a result of their injury or loss. The remedy is quite extreme, in that it bars the entirety of the action from commencing rather than simply deducting the relevant portion of the funds, to ensure there is no double dipping. Actions against provincial governments are governed by the applicable provincial legislation, and some do provide less onerous restrictions.
In the personal injury context, the leading case providing guidance on the interpretation of Section 9 comes from the Supreme Court of Canada (SCC) in Sarvanis v. Canada,  1 SCR 921, 2002 SCC 28 (CanLII) (Sarvanis). In Sarvanis, an inmate in a federal penitentiary sustained injuries while working in a prison facility, resulting in a permanent disability. As a result of his injuries, the inmate qualified for and received Canada Pension Plan (CPP) disability benefits, which were payable based on his disability.
At the trial level, the Crown argued for summary judgment on the basis that Section 9 of the Act barred the action, in that the plaintiff was being paid federal pension benefits. The trial judge disagreed and found the action was not barred by statute. On appeal, the Federal Court of Appeal (FCA) applied a broad interpretation of what was considered to be compensation and concluded that the proper interpretation of Section 9 resulted in it capturing both compensation payments and more general federal pensions.
The SCC took a different view regarding the proper interpretation of section 9. In overturning the FCA decision, the SCC found the action could proceed because the Act “establishes Crown immunity where the very event of death, injury, damage or loss that forms the basis of the barred claim is the event that formed the basis of a pension or compensation award. The CPP, a contributory plan not contingent on death, injury, damage or loss, but rather on physical condition and on adequate quantum and duration of contribution, is a significantly different animal (para. 39).”
While acknowledging that the use of “in respect of…death, injury, damage or loss” allows for a broad interpretation, the SCC found that it must be interpreted within the overall context of the Act. Therefore, the SCC found that to fit within the scope of section 9, the payment received (in this case the CPP disability benefit) must be payable only when the disability was caused by a particular type of event, and not just on proof of a disability. The pension in this case was payable without reference to the cause of the disability, and as such was not caught by section 9.
 Crown Liability and Proceedings Act (R.S.C., 1985, c. C-50) s. 9.
 Sarvanis v. Canada,  1 SCR 921, 2002 SCC 28 (CanLII)