True enough, but the identification of a disguised merchant raider was no easy task. He didn't have a worldwide instant live computer hookup that lists every ship at sea. He could only go by the ship's outer appearance. The Germans would have been flying a false flag (until or till just before the moment they opened fire). They would have been doing everything possible to appear as an innocent noncombatant. How was the Sydney to be 100% certain as to the identity of the German ship under those circumstances? Was there any way for them to be 100% certain, short of boarding the Kormoran? I doubt it. So they could have stood off all day and still not have ever figured out who that ship belonged to. The only way to finally confirm it was to approach and send a boarding party, I would think. That requires a close approach.

I don't doubt he would have been court martialled (as officers tend to be when things go badly awry), but that does not necessarily indicate that he was negligent....more like he was unlucky, and the crew of the Kormoran made their first shots count.

No one can be certain of the result in such a situation. German ships (U-boats) were also lost making close approaches to disguised Allied "merchant" Q-ships.

Bad things can happen...no matter how careful and efficient people are. It doesn't always mean that some commander must be damned for it.