During Paterson Ridge's charity sale, a book belonging to Mr. Elliott is accidentally sold. Kathleen finds - and publishes - a love poem that falls from the book but who is the lady of Herbert's dreams?

Spanish gypsies pass through Paterson's Ridge, and Danni falls in love with Carlos, while Hannah loves Carlos' older brother. Then the town turns against the gypsies after several robberies take place.

Duncan leaves town just before Rob returns. In town, the stables are going up for auction and Rob wants to buy them, but can't afford it on his own. He must try and convince Colin that they are a good buy.

The Morrell clan turn up to settle an old score with Matt. As luck would have it Matt has left town leaving either Rob or Colin to fight in the duel - if they don't, the Morrell's will burn the town down.

Emily goes into labour while in the cabin shortly after Matt finds her with Nancy. Colin gets ready to fight in the duel, writing a farewell letter to Emily.