"But in the end he's made his call, and I don't know the details of the issue," Mr Key told TV3's Firstline programme.
The Prime Minister said he had been made aware the inquiry and its findings under the 'no surprises' rule.
"The State Services Commissioner [Iain Rennie] gave me a briefing of the findings which were the same as what he clearly publicly said - that he didn't find it a matter that would have been subject to dismissal. But there were clearly some issues and Roger Sutton's acknowledged those."
The public could rely on the State Services Commission as a "thoroughly professional" organisation which had spent a lot of time on the investigation, Mr Key said.
"In the end their findings were not to dismiss Roger Sutton, so that probably tells you where they see the information they have sitting on the spectrum, but obviously Roger's decided that his future's not with the organisation anyway."
Mr Key said Cera was doing a good job on the Canterbury rebuild, but acknowledged "there will always be people in Christchurch who say there are elements of frustration".
"But real progress is happening in Christchurch, you can feel that, and a lot of people are feeling a lot more confident about the future," he said.
"It's never going to be an easy task. Roger Sutton took a big pay drop to go there because he's passionate about the city - that says something about the guy - but in the end, it's ended where it's ended."
Meanwhile, former Cera communications adviser Tina Nixon lashed out at the handling of the complaint against Mr Sutton, saying "no woman in the public service should currently feel confident that any complaint would be investigated professionally and without bias".
She questioned whether "people really think that a hug was what it was all about".
Sutton: "I am who I am"
The father-of-three walked in to a press conference hand-in-hand with wife Jo Malcolm yesterday to announce his resignation, of his "own free choice", effective from January 31 next year.
"Hugs, jokes ... I do do those things, and I've hurt somebody with that behaviour and I'm very, very sorry about that," Mr Sutton said.
"But I am who I am. I have called women 'honey' and 'sweetie', and that is wrong. That's a sexist thing to do, and I'm really sorry."
His wife said the investigation process had been "hideous", and her husband's "hugs and jokes have been misinterpreted".
Employment law expert: It's about power imbalance
Employment law specialist Susan Hornsby-Geluk said sexual harassment was "very much about the power imbalance in the relationship".
"That's because even if somebody is doing something that's just a hug or a joke, it's far more difficult for somebody who is subordinate to actually say, 'look, I'm uncomfortable, stop that'," she said on Radio New Zealand this morning.
"So that's where it does start to become sexual harassment because the recipient of it doesn't feel able to do something about it to stop that behaviour."
Ms Hornsby-Geluk said the threshold for sexual harassment complaints was "very high", and in Mr Sutton's case the inquiry found he did not breach that threshold. However, she believed his actions were serious.
"When we talk about calling someone 'honey' and 'sweetie' and hugging somebody it tends to sort of reduce it to a fairly basic level. But I think it would be fair to say though that somebody doesn't make a complaint of that nature which escalates right up to the States Services Commission without something reasonably substantial happening to them and there being some serious impact on them."
The woman at the centre of the sexual harassment allegations would need a lot of support from Cera bosses to return to work, particularly during the next two months while Mr Sutton continues to head the organisation, she said.
"I think it's very, very difficult for the complainant in all of this, not only does she have to work with him ... but she has to go back into a workplace where she's the one who has led to a very popular chief executive having to leave, so I would think that she may be vilified by some and might be a hero to others, but it's certainly not going to be a comfortable relationship for her for at least a short time," she told Radio New Zealand this morning.
Ms Hornsby-Geluk said in her experience many women who have made sexual harassment complaints such as this find their position in the company becomes untenable.
"But from a public perception perspective, it very much looks like 'poor Roger Sutton the hero has been forced out and who did this to him'. Hopefully that's turned around a little bit because she must be in quite a difficult situation."
