- Jessie McClusky turns up in Paterson's Ridge to run the Railway Hotel. While much of the town doesn't like Jessie, it is Emily's reaction which has Colin worried. It takes a real heart-to-heart for Emily to reveal her secret.
- Jessie McClusky, the new owner of the Railway Hotel, causes a stir amongst the locals when she arrives in Paterson's Ridge. Jessie's arrival forces Emily to confront her past and a secret which has haunted her. The sudden appearance of a man from Duncan's dark past forces him to face his own demons, while Danni reveals her true feelings for Duncan.
- Duncan ("Hugh Jackman") is still haunted by his past and troubled with nightmares from which he wakes up screaming, causing the rest of the household to be concerned about him. Despite their well-intentioned questioning of the young merchant marine on the subject, he still refuses to reveal the nature of what it is which haunts him.
Danni starts working full-time for Hannah at the restaurant. and general store.
Three strangers pull into town and when a gang of local bandits attempt to rob them, the newcomers defend themselves with deadly force, leaving most of the would-be robbers dead. Meanwhile there's another new arrival in the form of the red-headed and feisty Jessie McClusky ("Josephine Byrnes"), who has taken over the hotel from the recently-imprisoned Jack Mason, and set tongues wagging in the process.
Matt ("Andrew Clarke") asks Montana ("Gabrielle Fitzpatrick") for her help in finding out what ails Duncan, and she agrees to give it a try. However, when she attempts to get him to open up, he tells her that there are things weighing heavily on his conscience, which he doesn't wish to share with anyone.
Jessie brings Matt a letter from Rob, who is still away on a cattle drive, stating that she met him in her previous 'establishment,' the nature of which she is cagey about, but it is implied to be a bordello.
It turns out that one of the strangers who had taken on the bandits is known to Duncan, and is is none other than his ex captain, a villain called Captain Ezra King ("Peter McCauley"). Their reunion is less than friendly, and the encounter forces Duncan to tell Matt something of his past. He reveals that he and King had served on the same ship together, and that he (Duncan) had been responsible for accidentally running the ship aground, inadvertently causing the death of everyone on board but himself, or so he had believed until King had turned up that day. Matt says he will help Duncan get to the bottom of events.
Meanwhile, when Danni tells Emily about the new hotel owner, and how she is allegedly a woman of ill repute, the minister's wife is visibly shaken when she hears Jessie's name.
Matt's investigations into the mysterious Captain King unearth only the fact that he is a very wealthy man, and has recently bought the biggest cattle station in the area. This news confuses Duncan, as he states that King had been a penniless drunk, to his knowledge.
Danni and Montana fight when Danni accuses Montana of being interested in Duncan, making it clear that the accusation stems from the younger girl's own attraction to the sailor.
The morally-outraged ladies of Paterson's Ridge, led by an uncharacteristically venomous Emily, make a stand against Jessie and tell her to get out of town. Colin intervenes and apologises to Jessie for his wife's behaviour. When Colin later demands an explanation from Emily for her hostility, she shocks him with the announcement that Jessie is in fact her estranged mother.
Matt and Duncan discover the bodies of the bushwhackers, and from the evidence at the scene, deduce that Captain King and his men were responsible for the murders. Duncan decides to go after them on his own, determined also to question his ex commander about what really happened when their ship foundered, but Danni discovers his plan an insists on going along with him. Montana and Matt discover what Duncan and Danni are up to, and race after them. Meanwhile Duncan and Danni locate King and his men and take a look inside the waggon they are protecting so fiercely. They find that it contains a hidden hoard of gold coins, but before the duo can make their getaway, they are discovered by the villains, who voice their intention to kill the couple, prompting Danni to declare her love for Duncan to him. Just in time, Matt and Montana arrive and rescue the pair, and retrieve the gold which it turns out King and his men had stolen from the wrecked ship. The subsequent investigation of the case reveals that King had planned all along to steal the gold, and had deliberately sabotaged the vessel's compass, so that anyone who tried to steer it would go off course and hit the reef. This effectively exonerates Duncan from blame in the disaster.
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