The Act seems to disagree with DaveB.
Section 230 clearly says that an owners corporation can’t pay costs or expenses, incurred in a losing action against an owner, from admin or sinking funds. It has to raise a special levy. However, that levy can’t be raised against the owner who was successful in the action.
It makes sense – why should someone have to pay a share of the costs of another party that was in the wrong? FYI: Chapter five is the section of the Act dealing with disputes within owners corporations.
230 Restrictions on owners corporation levying contributions for expenses
(1) An owners corporation cannot, in respect of its costs and expenses in proceedings brought by or against it under Chapter 5, levy a contribution on another party who is successful in the proceedings.
(2) An owners corporation that is unsuccessful in proceedings brought by or against it under Chapter 5 cannot pay any part of its costs and expenses in the proceedings from its administrative fund or sinking fund, but may make a levy for the purpose.
(3) In this section, a reference to proceedings under Chapter 5 includes a reference to proceedings on appeal.