Luke goes out to look for Steve and finds her body. Discovering that Steve's horse had been shot, immediate suspicions falls on the Gypsies who have been seen hunting in the area. Dave Watson organises a posse who burn down the Gypsies' caravan, but when a bullet retrieved from Steve's horse identifies Dave Watson as the shooter, Luke confronts him with rifle in hand. Dave admits to the act but states that he was unaware that Steve was in the area and was only firing a warning shot to scare off one of the Gypsies. Frank intervenes and charges Dave with manslaughter. Unable to remain in the valley, Luke packs up his things and leaves for Sydney. Matt and Lucy become foster parents to an infant.