Presumably they weren't using either height hold if they managed to fly into the sea! No doubt there is a manoeuvre facility on the height holds so that would imply that the button was pressed whilst the aircraft was being positioned - hence the loss of height protection.
Our Bar alt hold is good but nothing like as tight as the rad alt hold - it has a smoother circuit to take out some wave motion but it is still the weapon of choice for over water work, especially at night.