In an effort to get closer to Max, still under suspicion for Wolfie's disappearance, Bernie asks him to help in his efforts to rid the camps of their criminal elements. Kate and Bernie go to Island Bend and end up in trouble, spending the night in the bush together. Eva arrives from Germany and is devastated to discover that Wolfie is missing.
Michael stands by Stuart as he is found guilty and sentenced to five years imprisonment. Molly and Michael have problems to resolve with the lease while Michael organises opposition to the Authority after cattle die due to their negligence. Max excitedly reveals that a close friend is arriving from Germany.
The court finds Stuart has a case to answer and sends him for trial. Michael goes to Lilian and she urges him to make peace with Wolfie, but Wolfie disappears mysteriously. A strike is threatened and Molly pressures the Authority to improve the worker's conditions. Max continues his letters to Eva compounding the lie.
Stuart's arrest divides the community and scandal is brewing over Michael and Lilian's love affair. Kate nurses Wolfie back to health but he is deeply depressed by the forthcoming hearing. Michael tries to reach some understanding with Wolfie. To avoid dismissal Lilian takes a job out of town and Max tries to hide the truth about Wolfie from Eva.
It is 1951 and the Scheme is still in the planning stages but the small township of Cooma is beginning to attract new arrivals and sooner or later, they all find their way to Mick's Café. Molly and Jack's daughter Kate returns home from Sydney unexpectedly and catches the eye of engineer Gordon King. School teacher Lilian Anderson arrives in Cooma and makes an immediate impression on Michael. East German refugees Wolfie and Eva get married before he and Max leave for Australia to work on the project. Eva will have to wait two years to join them.©tz