You need to take your daughter to a child psychologist and tell her to be truthful, then you need to ask that paychologist what to do to ensure he cannot harm your daughter or any other child again. You need to file a report and speak to a prosecutor to press charges once you have additional evidence. Does canada have child protective services like the US CPS? You need to be reaching for as many advocates for your daughter as possible right now. In the US, character witnesses carry little weight against accusations verified by a licensed psychologist.
Your very brave daughter and your very special trust that you have with your special daughter is much more important Tha anything else. These situations unfortunately happen...alot. Its Not right. Its not normal and its not acceptable. I would go public .. I am talking papers, Tele and every abuse centre available in order to keep the perverted arse****s away from your daughter and known for others to be aware. You should protect and honor your daughter as the loving Mum you are. Nothing else. No one else matters right now. Support and strength to you and your daughter. Talk and rite down and record the incidents so you don't have to keep going over it all and it can digest in a proper way. Tell tell tell and fight for your own creations future. Good luck
Can you get a CASA (Court Appointed Special Advocate) for your child through the courts?
What are the "questionable things" your daughter says were happening? I'm not sure tickling grandpa's brother with grandpa there is all that concerning - in context, it sounds like it could be family play. Were there other things?
Since you've always been close to your dad, have you ever experienced or suspected him of being an abuser?
For a grandparent to file for custody of a grandchild, and have a court date to determine that, there must be more issues here? In the US, for a grandparent to be considered for custody of a child, the parents must be considered to be unfit. Here, a grandparent can't just come in and take custody away from a fit parent against their wishes. (Which doesn't mean the parents are unfit, it means the court views the parents as unfit).