As with most things in Strata, the answer is never as simple as yes or no. You have to look at the Act, then the Regulations and what you get is that you don't need a General Meeting to approve legal action if the estimeted cost of the action is less than $1000 per lot or $12,500 in total – unless the legal action is to recover unpaid levies. There are other complications but that covers most possibilities.
The reason pursuing unpaid levies is exempt is that the defaulter becomes liable for all the costs associated with recovering the debt. The reason the limit is so low – $12,500 for any developments of over 13 lots – is depending on which side of the customer-developer divide you sit – either to prevent litigation mad ECs frittering away the life savings of poor unprotected retirees OR making it almost impossible to force bodgy developers to deliver to new home owners anything resembling what they paid for.
Anyway, this is what the Acts says (but remember, it's subject to the regulation):
80D Legal action to be approved by general meeting
(1) An owners corporation or executive committee of an owners corporation must not seek legal advice or the provision of any other legal services, or initiate legal action, for which any payment may be required unless a resolution is passed at a general meeting of the owners corporation approving the seeking of the advice or services or the taking of that action.
(2) The regulations may make provision for or with respect to exempting any type of legal service or legal action from the operation of this section.
The Regulations (2010) say:
15 Exemptions from need for approval for certain legal action
(1) The seeking of legal advice, the provision of legal services or the taking of legal action is exempt from the operation of section 80D of the Act if the reasonably estimated cost of seeking the legal advice, having the legal services provided or taking the legal action would not exceed:
(a) an amount equal to the sum of $1,000 for each lot in the strata scheme concerned (excluding utility lots), or
(b) $12,500, whichever is the lesser.(2) In a case where the cost, or estimated cost, of seeking legal advice, having legal services provided or taking legal action has been:
(a) disclosed by the Australian legal practitioner concerned in
accordance with the Legal Profession Act 2004, or
(b) set out in a proposed costs agreement under that Act, the reasonably estimated cost of seeking the legal advice, having the legal services provided or taking the legal action is taken, for the purpose of this clause, to be the cost or estimated cost so disclosed or set out.
(3) The seeking of legal advice, the provision of legal services or the taking of legal action is exempt from the operation of section 80D of the Act if its purpose is to recover unpaid contributions and interest under section 80 of the Act.