The OC is not liable in a lot v lot dispute unless one party can show that the OC allowed the poor behaviour. For instance, Smokin’ Joe gets taken to NCAT by the upstairs neighbour and uses the fact that the Owners Corp had chosen not to pass a by-law restraicting smoking as defacto permission to continue doing so. next stop, upstairs neighbour takes OC to tribunal to force them to pass an appropriate by-law.
Scenario two, a resident objects to having to walk thorough clouds of smoke from smokers on common property. Again, the OC could be taken to the Tribunal for failure to maintain common property for the safety and wellbeing of all residents.
Doing nothing is not a “zero sum” event – inaction may have consequences and the OC has to accept responsibility for them if owners choose to maintain the status quo.