The interaction of steep waves with surface ships and submarines may be simulated efficiently using a moving boundary finite element method. Here, unstructured hierarchical meshes are generated by triangularizing an underlying quadtree grid which adapts at each time step to follow the free surface. A potential flow theory finite element solver, developed by Wu & Eatock Taylor (1994,1995), is used to solve the two-dimensional nonlinear free surface problem in the time domain. Numerical results are presented for the following cases: standing waves in a rectangular tank; standing wave interaction with a fixed surface piercing rectangular body; and wave interaction with fixed submerged horizontal circular cylinders in a rectangular container. The results show encouraging agreement with analytical and alternative numerical schemes.