Smith received this award for his action as Master of the New Zealand Shipping Company cargo ship Otaki. On 10 March 1917 in the Atlantic Ocean, Otaki, armed with one 4.7-inch gun, sighted the German merchant raider SMS Möwe, which was armed with four 150 mm, one 105 mm and two 500 mm torpedo launches guns.
The raider ordered Otaki to stop but Captain Smith refused. A duel ensued, during which Otaki secured a number of hits and caused Möwe considerable damage, but Otaki sustained much damage and was on fire. Captain Smith therefore ordered his crew to abandon ship, but he himself stayed aboard and went down with his ship.
His citation reads:
For most conspicuous gallantry and devotion to duty when in command of the S.S. "Otaki", on the 10th March 1917. "At about 2.30 p.m. on 10th March 1917, the S.S."Otaki", whose armament consisted of one 4.7 in. gun for defensive purposes sighted the disguised German raider "Möwe", which was armed with four 5.9 in., one 4.1 in. and two 22 pdr. guns, and two torpedo tubes. The "Möwe" kept the "Otaki" under observation for some time and finally called upon her to stop. This Lieutenant Smith refused to do, and a duel ensued at ranges of 1,900–2,000 yards and lasted for about 20 minutes. During this action the "Otaki" scored several hits on the "Möwe", causing considerable damage, and starting a fire which lasted for three days. She sustained several casualties and received much damage herself, and was heavily on fire. Lieutenant Smith, therefore, gave orders for the boats to be lowered to allow the crew to be rescued. He remained on the ship himself and went down with her when she sank with the British colours still flying, after what was described in an enemy account as "a duel as gallant as naval history can relate."
As a Merchant officer, Smith could not receive the VC at that time. In 1919 he was posthumously commissioned as a temporary lieutenant in the Royal Naval Reserve, which entitled him to receive the VC posthumously. [ Wikipedia, anon, retrieved 5/12/22]
"Captain Smith, of the steamer Otaki, which was sunk after a gallant fight with the German raider, Moewe, was a son-in-law of Councillor J. Powell, or Port Chalmers, where he was very popular in shipping circles. He was chief officer of the Turakina before being appointed to the command of the Rakaia. Afterwards he commanded the Otaki and Hurunui, on the last trip in charge of the latter vessel. Some anxiety is being felt by her relatives as to whether Mrs Smith was with her husband on the Otaki when that vessel was sunk by the raider. Mr Wilson, chief engineer of the Otaki, was an athlete, and a very popular man." [Lyttelton Times, Volume CXVII, Issue 17444, 3 April 1917, Page 4]
