Don't Open Till Christmas

A man in a Santa suit and a woman meet in an alleyway to have sex in a car, and are stabbed to death by a man wearing a grinning translucent mask. During a party, another man dressed like Santa Claus has a spear thrown through his head, and dies in front of his daughter, Kate Brioski. At New Scotland Yard, Chief Inspector Ian Harris and Detective Sergeant Powell discuss the murders, and interview Kate, and her boyfriend Cliff. That night, another Santa is killed, having his face shoved onto the grill he was roasting chestnuts on an open fire.
The next day, a present (which reads "Don't Open Till Christmas") is delivered to Harris, Powell receives a strange call from a man claiming to be a reporter named Giles, and a Santa is shot in the mouth. Cliff tricks Kate into visiting a porn studio owned by an old friend, and after Kate storms off, Cliff and the model (who is adorned in a Santa cloak) prepare for outdoor photographs, but Cliff runs off when a pair of police officers spot them, and the model encounters the killer, who lets her go.
At a peep show, a Santa is knifed, which is witnessed by one of the strippers, Sherry Graham. Harris visits Kate and Cliff, and makes it clear that Cliff is a suspect in the attacks, due to being present for two of them. Powell finds Giles digging through his office, and tells him that the newspaper Giles stated he worked for claimed not to know him. Giles retorts by suggesting that Harris is hiding something, and that Powell should keep an eye on him. A Santa is assaulted by a group of teenagers, and runs into the London Dungeon, where he and an employee are killed.
In an effort to catch the murderer, several officers go undercover as Santas, and two of them are butchered at a carnival. The killer then abducts Sherry, intending for her to be "the supreme sacrifice to all the evil that Christmas is". Meanwhile, Harris is taken off the case, and when Kate calls him, she is informed by his housekeeper that he is visiting Parklands, a mental institution. A Santa is chased into a theatre where Caroline Munro is performing, and his body is brought to the stage by a trapdoor after he is stabbed in the face with a machete. Kate tells Powell of her suspicions about Harris (who has no birth certificate) but he dismisses her theories, so she goes to visit Parklands alone, while the killer castrates a Santa in a department store restroom.
Kate is confronted in her home by Giles, who she had learned was just released from Parklands, and is the younger brother of Harris (who changed his surname from Harrison after Giles was committed). Powell telephones Kate, and she tries to answer, but Giles strangles and stabs her. Powell hears Kate's death over the phone, rushes to Kate's apartment, and pursues Giles into a junkyard, where Giles electrocutes him.
Giles returns to his hideout, which he chases Sherry through when she escapes her chains. Sherry knocks Giles over a railing, and when she goes to inspect the body, Giles springs back to life, and begins throttling her. A flashback is then shown, and reveals that decades earlier Giles walked in on his father (who was dressed as Santa for a Christmas party) cheating on his mother with another woman. When Giles's mother discovered this, she and her husband got into an argument, which ended with Mrs. Harrison being knocked down a flight of stairs.
Harris wakes up from a nightmare, goes into his living room, and unwraps the gift he had gotten earlier, which has a previously unseen card that reads "Christmas present from your loving Brother". The present is a music box, which explodes after playing its song, killing Harris.

Question: What did Giles walk in on?
Answer: His father cheating on his mother; His father cheating on his mother