A marine services company in Eastern Passage, N.S., is mourning a "trusted deckhand" who died when a 13-metre commercial passenger vessel sank near the mouth of Halifax harbour early Tuesday morning.

Navy divers found the man's body inside the Captain Jim about nine hours after it began taking on water. The boat's captain and a client on board had abandoned ship and been rescued by a harbour pilot boat.

"Unfortunately the vessel went down so quickly that only the captain and the passenger made it to the deployed life raft," said a statement issued by RMI Marine Ltd., which owns the Captain Jim.

"We sincerely regret the passing of one of our dedicated and loyal employees and he will be missed by his coworkers and friends ... our thoughts and prayers are with his family at this very tragic time."

The company did not identify the man.

The Captain Jim is a marine services vessel, and the company's work includes taxiing people back and forth to other vessels.

RMI Marine said the boat had just picked up a client from a tanker outside the harbour where they had been taking fuel samples. The Captain Jim was returning to shore when the captain called for everyone to abandon ship and notified search and rescue.

Maj. Amber Bineau, the duty commander of the military's Joint Rescue Coordination Centre in Halifax, confirmed the vessel sank in about 12 to 15 metres of water near Devils Island. She said the distress call came in around 2 a.m. The people on board said they had lost power, she said.

"About 20 minutes later they indicated they were taking on water and preparing to abandon," Bineau said.

One person died and two others on board were rescued by a harbour pilot boat after they abandoned the vessel, the Captain Jim, when it began taking on water. (Mac MacKay)

She said the two people who were plucked from the water did not have survival suits on, but were wearing flotation devices and were in good condition. They were assessed by first responders and released.

Navy and Canadian Coast Guard vessels were dispatched to search for the missing person. The rescue co-ordination centre said shortly after 11:30 a.m. that divers had found the body of the person inside the sunken vessel.

The rescue co-ordination centre initially said the vessel was a fishing boat, but later clarified it was only registered as such and was not being used for fishing.

Search vessels continue to look for the missing employee of the water taxi company. (Robert Short/CBC)

The Transportation Safety Board is sending a team of investigators from Dartmouth to look into what happened on the Captain Jim. A spokesperson said they would be spending the day interviewing people involved, including the two survivors.

The commercial vessel sank near Devils Island at the mouth of Halifax Harbour. (Google Maps)

Multiple vessels from the Canadian Coast Guard and the Royal Canadian Navy as well as a naval dive team were involved in the search.

A Hercules aircraft and a Cormorant helicopter also helped in the search.

The Canadian Coast Guard told CBC News late Tuesday afternoon its environment response branch was responding to the potential pollution threat from the incident.

"Coast guard will work with the owner on the development of a response plan for the vessel to mitigate any threat of pollution to the marine environment," spokesperson Stephen Bornais said in an email.