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I think they can. We had an owner at our block that continuously attempted to send the committee to NCAT as a payback for sour grapes for being out voted on certain issues. Certainly deterred them from wasting EC and managing agents time.
I take your point and I know that vexatious or hobby litigants exist but the processes exist under Tribunal laws and those laws trump by-laws.
It might be more appropriate for owners to pass a by-law that, in the event of claims to NCAT that the majority of committee members regard as frivolous, vexatious or without foundation, the strata committee is instructed to request a ruling on costs under NCAT’s “special circumstances” that the matter had limited or no possibility of success and where the claim was “weak, misconceived and bound to fail”.
That way you are sending a message to the miscreants but leaving the the decision on costs where it belongs, at NCAT.