Cpl. Rick Brown was the watch commander on duty in August 2010 when he and other RCMP officers and at least one jail guard viewed the women's sex acts on a closed-circuit monitor.
The Crown argued at trial that Brown should have intervened but seemed to consider the entire situation entertaining and invited others to watch.
Brown's lawyer told the trial there were no guidelines in place at the time governing what should be done in such situations.
B.C. Supreme Court Justice Selwyn Romilly ruled Thursday that Brown was not out of line in watching the women have sex and prisoners should not expect privacy while behind bars.
Romilly called the case "one of the most bizarre" he'd seen as a judge and was skeptical about whether it should have proceeded even before the trial began last month.
Outside court, defence lawyer Glen Orris said he expected the not-guilty verdict.
"Ever since I've had this file, I've strongly believed there wasn't an offence here," Orris said. "This matter should not have been dealt with criminally."
Orris said Brown plans to go back to work with the RCMP, having spent more than four years on paid administrative leave pending the outcome of his trial.
"He's an extremely good police officer," said Orris. "I like to think this hasn't done anything to his career. We'll have to wait and see what the RCMP does. I hope what they do is welcome him back to work."
Brown said he's still digesting the decision.
"I'll probably just take the weekend to unwind," he said. "It's been a long time — four years."
Kamloops RCMP Supt. Brad Mueller said Brown will remain on administrative leave pending an internal disciplinary process that could include a hearing.
"It depends on how much further investigation needs to be done. Realistically, you’re probably looking at a few months away," he said.
"The courts have made their decision. We respect that. Now, it will be addressed by the internal disciplinary process."
Crown spokesman Gordon Comer said prosecutors will review the decision before they decide on any further steps. The Crown has 30 days to appeal.
The incident occurred Aug. 18, 2010, when two intoxicated women were placed in the same holding cell at the Kamloops RCMP's detachment. They began engaging in explicit consensual sex acts.
Brown and several other Mounties and at least one jail guard, watched on closed-circuit television from another room on the detachment's cellblock.
The trial heard that as one of the women was being checked into jail she reported that she was HIV positive.
The Crown said Brown had breached his duty by watching the sex acts and inviting others to do so.
However, Brown's defence was that he was not out of line because there was no black-and-white RCMP protocol outlining what to do when prisoners begin having sex.
Brown said he would have separated the women if the cellblock was not full. Court heard there was nowhere to move them.
Video-surveillance footage played during the trial shows Brown and other officers appearing to laugh and joke while watching the women have sex.
Charges against two other Mounties were stayed and a jail guard who pleaded guilty last year was placed on year-long probation.
(Kamloops This Week)