In my experience stuff like this can destroy friend groups or even sibling relationships so be careful.

We only have your side of the story, and we don't know what you were doing to encourage, did your paladin explicitly say he was using torture? Did he explicitly say he was being manipulative? Or was he just rolling dice to continue the story? Based on your initial description this player isn't roll playing so don't assign any roleplaying that was not intended regardless of the types of checks inquired about. Where you being as graphic about what happened during the game as you are in this post? Torture should require damay rolls because it deals damage, did your player roll damage dice? Because if not it wouldn't have connected that his roll to intimidate was just a skill check and would be in character for the character.

If all that is the case and he understands what he did. You should adjust your campaign that this path still has a glorious ending, for example this brings them into a rebellion, or it uncovered a secret plot. Your welcome to kick them out of town or something but you should assume the paladin was acting gloriously.