NPC's do not react to one another

I just won the tournament recently and came across a sore loser.
I couldn’t beat him because of the poison so I brought him to a guard and they did nothing.
I read another post where everyone said it was because the guards do not know who is in the wrong. Okay, I thought.
So I brought the loser to Sir Hanush and goated the loser into attacking Hanush. Nothing happened.
So at this point I’m wondering if an NPC’s are able to massacre a whole town with the guards not even batting an eye.

Peter is a civilian. Guards won’t do anything. Either run away, or learn to fight.

Yeah I managed to beat him eventually by only doing ripostes. thanks for responding.

Its still a good point.