In a letter to the Slab, local Labour MSP Donald MacKinnon said Kellerman’s legal action initially named the wrong community body.
He said the case was brought against the Bernera Community Development Trust, which is completely separate from the BCA and its cafe.
This was later amended after the trust wrote to the Slab to explain that it had no responsibility for the cafe.
But the Na h-Eileanan an Iar (Western Isles) MSP said the board continued to fund the legal action during this time and the trust “incurred legal costs with considerable stress”.
A spokesperson for the trust said it was “incredible” that it suffered “in this way, when it has done nothing wrong and is not involved and the parties were clearly informed of this”.
MacKinnon also questioned the public interest in using taxpayer money to support the case.
“Legal aid serves an important role in ensuring access to justice,” he said.
“However, it is equally important that publicly funded litigation is subject to appropriate scrutiny regarding its legal basis, prospects of success and overall reasonableness.”
He urged the board to consider revoking its funding for the case against the BCA, particularly given the “significant financial impact” it was having on a “small charitable organisation”.