I have Anomen and have done his sister quest 2 times ( with saved games ), and if you tell him to kill the supposed murderer, when you do the quest he kills the guy's daughter and our party loses rep points. But when I tell him to do the knightly thing and we go to the courts, they can't do anything about it. Is there any possible way to complete this quest?

Going to the magistrate does complete the quest...

who is the magistrate?

Govt. building... I think 'she' carries a mace? - to the left of the entrance, anyway...