Deckhand Dallas Reedy, who was sitting on the deck when the wave hit, was rescued after clinging to a petrol can for 18 hours.
The report, released in Invercargill yesterday by chief commissioner John Marshall, QC, and chief investigator Captain Tim Burfoot, said the 11m Easy Rider was so overloaded when it left port about 8pm on March 14 it was in a "precarious condition" from the time it left the shelter of Bluff Harbour.
Captain Burfoot said the boat was riding 2.8m above the waterline when waves of up to 4.5m to 5m could have been expected in the strait.
As Easy Rider left the wharf, an observer noted sea water was sloshing on to the deck. It was overloaded to the point where it was "tender", meaning it would take only a small force or shift in weight to cause it to list, the report said.
"The question arises then, how did it survive the first four hours of the voyage without capsizing? The answer probably lies in the complexity of forces that act on a small vessel as it rolls and pitches in relatively large waves."
The hold was filled with ice and bait, as Mr Karetai and two crew members were planning a fishing trip after dropping off their passengers at Big South Cape Island.
Equipment, stores and passengers' personal effects were loaded on to the deck. The combined weight of the nine aboard was estimated at 927kg. They were in the wheelhouse or on deck, above the boat's centre of gravity, Captain Burfoot said.
The vessel was of a design which was known to have limited reserves of stability when fully loaded, although Mr Karetai may not have been aware of this.
Mr Reedy told the commission he had just listened to the midnight radio news when he heard the sound of a large wave come over the starboard side of the vessel.
The boat heeled sharply to port and he was washed off, but managed to grab hold of a rope.
The boat capsized.
He pulled himself up on to the inverted hull, where he remained for two hours before the boat sank. He hammered on the hull but there was no reply.
The alarm was raised when Easy Rider failed to rendezvous with a helicopter which was to off-load passengers' personal effects.
A search began about 15 hours after the capsize.
Captain Burfoot said lives could have been saved if all those aboard had been wearing lifejackets, and if rescuers had been alerted more quickly.
The toll
Died, bodies recovered: Crewman Shane Ronald Topi (29), Boe Taikawa Gillies (28), John Henry Karetai (58), Peter Glen Pekamu-Bloxham (53).
Never found: Skipper William Rewai Desmond Karetai (47), Odin Nirvana Karetai (7), Paul Jason Fowler-Karetai (40), David George Fowler (50).
Survived: Deckhand Dallas Reedy (44).