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My response to anyone in strata threatening to sue for libel when they are caught with their pants down is “bring it on.”
Having been close to a target of a law suit, where a rich owner tried to bully the EC and then sued selective members (in the vain hope that the EC’s insurance wouldn’t kick in) for an alleged libel – and lost more than $250,000 in costs when the action failed – I would just point out to the litigious owners that trying to prove a libel in strata is very hard.
For a start there is qualified privilege – i.e. you can say anything you like as long as it’s done in good faith, is relevant to the management of the building and is not done out of malice. It doesn’t even have to be true as long as you have good reason to believe that it is.
Possible defences include the truth, the fact that is was only circulated within a small group who had a vested interest in the matter (like the owners of the building) and that the owners’ right to know superseded the alleged victims desire to keep matters private.
In fact, you could argue that in not conveying the facts of a situation, the EC or individual members would have been derelict in their duties to the Owners Corp.
I would tell the person issuing the threats that if they do sue for libel, a general meeting will be held to discuss the issue with a view to getting Owners Corp approval to fund legal action (as the law requires), including the pursuit of costs.
People who threaten well-intentioned EC members with bogus legal actions (usually when their shortcomings are exposed) are slime and the lawyers who encourage them are parasites.