Phil Pearce, a builder, left his wife, Lesley, and young daughter, Diane, to move with Sandie Merrick into Mill Cottage. The Mill had been converted into a flat by the company that Phil had just formed with Joe Sugden. Phil and Sandie started an affair which was unveiled by Diane when she found out, to a packed audience in The Woolpack. Sandie's affair caused another village scandal, and Annie Sugden made clear her disapproval.