Spaceship physics object colliding with surface extension problem.

I have an active object which I have assigned the Type as 'Physics - SpaceShip Movement' and this flies around as I want. I have now added the Surface extension, as I want to create destructible terrain, and created a simple level (measuring around 600x500)

I have then added the event that if the Spaceship collides with the 'Surface' level it should 'Stop', however this does not work as expected and although the ships movement is stopped the moment it makes contact it then slowly passes though it.

Any ideas? Sorry if I haven't provided enough information, this is only my second post as I have just start with CTF2.5.