The point I was making was that you can’t expect the owners corp to pay for legal advice on a fight between two individuals where defamation has been alleged and not yet proven.
It might – and I stress only might – be appropriate for a strata committee to pay the unrecovered legal costs of a member who has sued someone over an issue related to their management of the strata scheme, and won their case.
But to answer the original question (again) it would be very irresponsible for the committee to take sides in an issue and fund legal action based on allegations of defamation of one owner by another. It would be different if the committee itself was defamed or accused of defamation.
That said, I recall a case where a resident sued a minority of the strata committee over a note sent out with the unanimous approval of the committee. The resident clearly hoped that by cherry-picking four of the nine members, the strata insurance wouldn’t kick in. But the strata insurer decided this was in fact an attack on the whole strata committee so provided insurance cover.
The resident lost, costing them in excess $300,000, while the winners suffered 18 months of terrible stress as they feared losing their homes.
Despite costs being awarded against the plaitiff, you would be lucky now to find a strata insurance policy that doesn’t specifically exclude defence of defamation claims.
Right now, if I was told two members of the committee in my building were thinking of using strata funds to pursue and/or defend a case of personal defamation, I’d call an EGM and have them both kicked off the committee, or at least block the use of committee funds.