If I were in your shoes I would call a meeting of all your owners and explain to them how they are being ripped off. You don’t need to make it an official meeting but if you did, you might as well go the whole hog and sack the executive committee and its self-interested chair.
You should be able to stop the passage of the by-law by raising the 25 percent of the votes required, but even if you don’t, this owner would be guilty of a fraud against the minority.
There are well-established principles for the transfer of common property to private ownership, including the payment of funds to the Owners Corp, and this owner has ridden roughshod over them.
As an interim measure, I would put a motion to the executive committee to declare the chair of the committee open and elect a new chairman. They can do that, although they can’t remove her from the committee entirely (that requires a 75 percent vote at a general meeting).
I would put up another motion to invite the strata manager to a meeting to explain her actions.
Privately, I would talk to the strata manager and remind her that this owner is not likely to be in power much longer, so she has to decide whether she is working for the chairwoman or the owners corporation (with the clear implication that the wrong choice could mean she won’t be working for anyone soon).
I would also contact council and tell them that there are serious misgivings about the way the EC approval was given and that approval may be rescinded soon.
And get yourself elected to the chair, at least for as long as it takes to sort this mess out.
One final point, people run around threatening legal action all the time but rarely ever follow through. The best answer is “go ahead – and my lawyer will make sure you pay full costs when you lose!”