I heard about this being a type of sleep disorder while I was studying psychology and it makes sense why he would deny it. It would be very embarrassing for him to explain to his daughter if he was caught. I remember the professor saying this can happen after the death of wife and no sexual partner has come into the picture. The professor also said to think about it as passionate REM dream of their partner remembering their most sacred time with them.
The information I put is from sleepsex.org.
As early as 1996, (Shapiro, Fedoroff and Trajanovic, 1996) SBS was identified as a medical condition that may place one at risk of being accused of sexual assault. Thus, if a person is aware of their SBS and takes it seriously, this knowledge may carry with it some accountability for not taking actions to prevent sexual misconduct.
SBS is listed in the most current (revised) edition of the International Classification of Sleep Disorders (ICSD-2), which is the diagnostic manual used by sleep medicine practitioners to make diagnoses. Although it is recognized as a sub-type of parasomnia, "sexsomnia" is not included as a particular type of sleep disorder with its own diagnosis.
SBS is mentioned in the ICSD-2 and recent medical research suggests sexual behavior in sleep is a distinct form of sleep-related behavior in the class "parasomnia" (Shapiro et al, 1996; 2003; Schenck & Mahowald, 2005). Over the past five years information in the popular realm has become available (e.g., articles have appeared in Cosmopolitan, Redbook, Details, Newsweek). A Web search will yield a number of information sources. However, the community of legal and health professionals and the lay public remain largely "in the dark" when it comes to SBS and its clinical and forensic implcations.
In fact, when one discovers their own SBS, usually after being informed about their behavior by a bed partner, they themselves are unlikely to believe that could behave in such a fashion. Often this is a source of conflict in couples as it is embarrassing to accept it as fact. Even when one reports another's (that is, a person complains he/she has been fondled, etc., by a person who clearly appeared to be asleep), to a friend or health care provider in an attempt to try to get some support and to encourage their partner to treat his/her SBS, these persons cannot expect others to believe that they have experienced unwanted sexual contact initiated by a sleeping individual.