Unsaturated wet granular media are usually modelled using force laws based on analytical and empirical results of liquid bridge forces between pairs of grains. These models make ad-hoc assumptions on the liquid volume present in the bridges and its distribution. The force between grains and rupture criterion of the bridge are a function of this assumed volume of liquid, in addition to other parameters like contact angle of the liquid, geometry of the grains and the inter grain distance. To study the initial volume and morphology of liquid bridges, hydrodynamic simulation of dynamic effects leading to formation of liquid bridges at grain scale are indispensable. We use a Smoothed Particle Hydrodynamics algorithm to simulate the hydrodynamics of the evolution of the free surface using a novel freesurface-capillary model, inspired by the molecular basis of surface tension. We present validations for the model and simulations of formation and rupture of liquid bridges.