Victoria Blackwood and her chaperone return from shopping in Melbourne, but their train journey ends when the tracks are washed away in heavy rain. Rob is sent to collect them and shares a passionate kiss with Victoria. Matt and Kathleen have a disagreement about Sean Carney's education and Emily donates a new organ to Colin's church.

Danni McGregor and Michael ride into a herd of brumbies. In the confusion Danni is thrown and falls into a disused mine shaft. Michael goes for help, but becomes lost in dense scrub and falls unconcious from cold and shock. Anita sees Matt's obvious affection for Kathleen and realises trying to rekindle their lost love could be useless. News of Luke's gold strike spreads.

Everyone is excited that the railway is coming to Paterson's Ridge, except Kathleen, because it will run straight through the middle of her property. She decides to go to Melbourne to argue her case. Matt is also going to the city to be sworn in as a new Member of Parliament. They travel together and Matt takes Kathleen to the ceremony where she pleads her case to the governor and then to a ball. They dance together and, filled with emotion, he tells her he loves her. Meanwhile, Oliver hires a mining engineer to conduct an assay of Luke's mine and Vernoica is sent to England.

Oliver Blackwood learns Luke's mine is worthless and tricks Luke into buying him out. Luke discovers the truth but it is too late and he is forced to abandon the mine and lose his mansion. The bank threatens to foreclose on Matt forcing him to muster his cattle through Blackwood's property to get to the cattle sales, but Blackwood is determined to stop him. Luke is knocked unconscious after an explosion in his gold mine.

Matt and Kathleen fight a land-grabbing politician's scheme to drive the farmers from the high-country after news breaks that their high-country grazing leases are about to expire.

Josh is found in the woods but refuses to talk to anyone. Two graves are found, of his parents, so Emily and Colin take him in. But then people come to take Josh away - will he talk and tell the truth in time to stay?

Montana and Rob find an American surveyer who has been shot. They help him and he reveals he was shot by a man spying on Montana. When Montana claims that she has seen someone loitering by her property and her horses are poisoned, Rob is determined to protect the woman he has more than neighbourly feelings for.

Montana is charged with the murder of Sam Taylor's father and scheduled to be extradited to America. But Matt and Kathleen get her a hearing in Paterson's Ridge with Matt as her defender.

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.