After having yet more of his valuables stolen by Swiftnick, Sir John decides to hire the services of Captain Lucas Knife, the most notorious and bloodthirsty Thief Taker in England, to capture the gang once and for all.

Scared of a premature death, Tom decides that it is time to end his career as an outlaw, and concentrate on doing well in his school work, as he promised his late mother. DeeDee sees this move as cowardice, to which Tom states that he had always planned to retire at around this time.

However, Knife, bearing a grudge against the school teacher (Mr. Megson) from many year ago, frames him, and makes it appear that he is in fact Swiftnick. Tom has little choice but to resume his post and save his school teacher.

Meanwhile, Captain Watt (who has been demoted to housemaid, to accommodate Knife) stumbles across a box of Sir John's jewels in Knife's chamber. When Tom arrives, Sir John mistakes him for a sidekick, but chases him and captures him anyway. At this moment, Captain W