I think there’s some cultural views in play here that are making the onlookers in the denouncement scene look worse: mainly, it looks a lot like a Japanese bullying scene.
As those are usually explained, onlookers are known to have difficulty speaking up in defense of victims because the cultural focus on harmony means that “ending” discord as fast as possible is often more important than resolving disagreements in ways that leave everyone satisfied, so people who speak up in defense of the victims are, in a way, “at fault” for contributing to the discord caused by an argument. If they don’t manage to turn public opinion in their favor, they are viewed negatively, and can become just as much of a target as the original victim.
Of course, (fantasy) Europe has no such cultural pressure, so if the author wanted it to be understood as such in an internally consistent way, they probably should have mentioned it in the setting details.
@pandaman1982 The word honesty is being used for here is “seijitsu” (誠実), which according to my dictionary also contains meanings of sincerity and faithfulness. Her dad’s poor judgement of people is likely due to the latter definition of their motto.