The Trevaller family move from city and buy hotel at Waterloo Creek. The O'Farrell family want to get into the hotel to find a treasure. In one of the upstairs rooms, Jools Trevaller meets Elly, a ghost.
Feral O'Farrell plans to use his position as the building inspector to force the Trevallers out of the hotel. Elly tells Jools what happened on the day that she died.
Armed with new clues to the whereabouts of the treasure, Jools returns to the tunnels and finds a valuable old cutlass that was given to Elly's father by the Duke of Wellington after the Battle of Waterloo.