Noise complaints by one tenant against another are difficult to resolve at the best of times. Where the noise is coming from a child or children, there are really very few real options for the landlord. The Ontario Human Rights Code places a duty on landlords to accommodate the needs of a tenant that is covered under one of the Code grounds; one such ground is family status.
In your situation, even where the tenant (with the child) may not yet have asked you to accommodate her situation, the law expects you to anticipate such a claim. One way you could do this is to offer to install some sort of floor covering (at your cost) that would help to lessen the sound travelling between the units.
In that way you could, along with the record of your conversation with the tenant about her child’s activities, show the Landlord and Tenant Board that you have tried to balance the rights of both tenants in the best way that you know how. You are expected to communicate with both tenants about options. The complaining tenant may not like what you have to say, but you should explain that the law limits your options in this situation.
The Residential Tenancies Act does not take precedence over the Ontario Human Rights Code, and both work together to ensure the protection of tenants from eviction due to noise related to the tenant’s family situation.
In any case, you should not serve an N5 notice of termination for disturbances.