An inquiry chaired by a Supreme Court judge closely examined three different theories but found there was insufficient evidence to determine any one of them as the cause.

The judge considered the captain's diabetes and self-administration of insulin probably contributed significantly to the accident but he stopped short of making this his official conclusion.

The Australian National Airways aircraft registered VH-AET arrived at Cambridge aerodrome at 8:15 pm local time, about four hours late.

[3] Witnesses in the vicinity of Seven-Mile Beach[Note 4] estimated that the aircraft reached a height of a little above 400 ft (120 m)[10] before turning left slightly and descending steeply.

[9] The aircraft cleared the land and crashed into Frederick Henry Bay about 300 yards (270 m)[Note 5] beyond the water's edge and a mile (1.6 km) from the western end of Seven-Mile Beach.

[Note 6] On learning of the crash at nearby Seven-Mile Beach employees of Australian National Airways raced from Cambridge aerodrome to lend assistance.

[Note 9][20] A diving pontoon was towed to the site by Royal Australian Navy ship HMAS Huon.

[20] The bodies were badly mutilated and either naked or clad only in vestiges of underclothing, indicating the severity of the impact with the water.

[Note 14][35][36] After examining the wreckage recovered from the sea bed the panel was satisfied both engines were operating at high power at the time of impact and there was no pre-existing structural or mechanical defect that would explain the crash.

[21] The panel members were satisfied that, after take-off, VH-AET achieved a normal climb of about 325 feet per minute (1.6 m/s) and a gradient of about 1¾% before suddenly commencing a descent of about 17½%.

Calculations showed that the aircraft's descent reached about 4,000 feet per minute (20 m/s) and its speed about 160 mph (260 km/h) before it struck the water.

[38] In its interim report to the Director-General on 20 March 1946[34] the panel reduced these possible causes to 3:[23] The control box for the automatic pilot was recovered from the wreckage.

The investigation panel proposed that the automatic pilot might have been engaged at a height of about 400 ft (120 m) causing the aircraft to descend swiftly into the sea.

The panel proposed that the captain may have asked the supernumerary pilot to occupy the co-pilot seat during the flight to Essendon Airport.

[Note 20][6] The panel used a DC-3 aircraft with a cockpit identical to that of VH-AET to carry out four flight tests with the gyroscope caged.

[6][38] The investigation panel's report to the Director-General made recommendations including: On 24 April 1946 the Minister for Civil Aviation, Arthur Drakeford, appointed Mr Justice Simpson of the Supreme Court of the Australian Capital Territory to conduct an inquiry into the accident.

[Note 23][50][51] John Watkins, chairman of the investigation panel, told the inquiry the evidence supporting the theory that inadvertent engagement of the automatic pilot caused the accident was that its control box was recovered from the wreckage and its gyroscope was still caged.

[7] Justice Simpson rejected the bird-strike theory, saying the descent of the aircraft was caused by forward-movement of the control column in the cockpit.

[47][48][50] The inquiry discovered that the chief-pilot of the aircraft, Captain Thomas Spence,[Note 27] was diabetic and had been discharged from the RAAF in September 1941 as medically unfit.

[57] The inquiry also received evidence that a friend[Note 29] had asked Spence about his diabetes in relation to his employment as a pilot.

Investigations with Brisbane Hospital for the purpose of informing Justice Simpson revealed that Spence's hospitalisation was for diabetic pre-coma.

[38] After the inquiry had received all available information related to Spence's diabetes, Justice Simpson said the insulin reaction of the pilot might have had a considerable bearing on the accident.

[59] In Justice Simpson's report to the Governor-General he wrote that he could see much to support the theory that the most likely cause was Spence's actions in the cockpit while he was adversely affected by insulin.

However, in his report he didn't determine that the accident had been caused by Spence's medical condition because there was insufficient evidence to completely prove the theory.

Justice Simpson made five recommendations: The Tasmania Coroner, Mr Sorell, investigated the deaths of the 21 people whose bodies had been recovered.

[40] Twelve C-47s were purchased by the Commonwealth of Australia and hired out under charter to aviation companies, six to Australian National Airways.