The inquiry into the loss of the Waikouaiti was begun at Wellington on December 21. Before the taking of evidence the presiding magistrate said that the ship had been proceeding on the course fixed by the Admiralty, and asked that the details of the course be not published, except those immediately relevant to the inquiry. Captain John Bruce, master of the Waikouaiti, said he altered his course during the afternoon of November 28, and remained on it till 8.15pm. During that time there were banks of fog around the mainland. The sea was smooth, with a light south-west wind.

Between 2.02pm and 7.56pm, ten crossbearings were taken. A bearing was taken by the chief officer at 7.56pm. It was the last one marked on the chart by the chief officer at 7.56pm. Dog Island was not visible at that time. Up to almost 8pm, they definately knew where the vessel was. Captain Bruce estimated that at the time he was about five miles from Dog Island.

The ship held the same course until 8.15pm, at which time, seeing that Dog Island was still obscured, he pulled the ship a point and half to the southward. He considered he would thus clear Dog Island by a mile and a half to two miles. They had not sighted the light on Dog Island at 8.15 because of fog. The ship was doing about nine and a half knots. It was not quite dark at 8.15.

Captain Bruce said he maintained his course to pass Dog Island, and at 8.37pm he sighted land fine on the port bow. He gave orders to the man at the wheel to put the helm hard to starboard, at the same time ordering the third officer to ring "Standby". At 8.38, after the ship came round the south-east, she struck the bottom. In a few seconds the chief officer came on the bridge, and the master ordered all the ballast tanks to be sounded. At 8.38 and a half Captain Bruce rang "Stop" to the engine-room, and gave instructions to have the soundings taken all round the ship. The least depth found was 16 feet aft. The ship's draught was 20 feet 5 inches forward and 22 feet 6 inches aft. The captain sent to Bluff for a tug.

At the time the watertight bulkhead between the bunker and stokehold had commenced to fracture, and the water was increasing in the stokehold. It seemed unsafe to keep the men there any longer. At 10.30pm, with the flood tide, the ship started to swing, and he decided to try the engines. He rang full speed astern.

At that time there was 42 feet of water at the ship's stern. The chieft engineer informed the captain that he could not turn the engines, as something had fouled the propellor. The the captain thought rocks might be causing the trouble, but at daylight he found that the propellor blades were catching on the frame and rudder. One of the blades had been broken off. Nos. 1 and 2 holds were full of water. The tug that had left Dunedin was then sent back, but the pilot launch stood by until 4am, when the mails and ship's papers were put aboard and sent ashore.

The fog was still dense. At 7.30 the launch came back and towed the crew ashore in three lifeboats. The engineers, two greasers and three deck officers, as well as the master, remained on board. No subsequent attempt was made to get the steamer off, as with the two holds full of water she would not have floated. The remaining men left the ship at 6pm on November 29.

INGRAM C W N (1990) "New Zealand Shipwrecks - 195 Years of Disasters at Sea", Beckett Books Ltd. pg 371