A few problems there. At first instance, a single member NCAT matter at its first hearing (i.e. not an appeal), it is highly (95+%) unlikely you would get costs although it occasionally happens. Also I am not a fan of the standard “intimidate the other party financially” with assertions about costs. Lawyers; what can be said about them.
Perception is reality in all forms of politics. In this case, it seems like the strata committee member is trying to scare the plaintiff, so threats of potential costs are already on the table.
More significant is telling owners that if the SC loses, all owners except the plaintiff will have to cover the costs through a special levy raised to cover them. That has nothing to do with costs being awarded – which you correctly say rarely occurs – and everything to do with plaintiffs who prevail in and NCAT case not having to contribute to the expenses of the defence.
The words “special levy” should be enough to make somnolent owners prick up their ears and ask what their funds are being used for. A general meeting to discuss this could stop the action in its tracks.