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Susan rejects Karl as she cannot remember him and decides to divorce him. Soon after, Susan falls in love with Karl again and they decide to remarry.
Susan regains her memory halfway through their vows.
Karl's father, Tom (Bob Hornery), comes to stay with the family and he reveals he is not Karl's biological father.
Karl assures Tom he will always consider him as his father, but he decides to track down his biological father, Ronald Davies-Smythe (Tony Hawkins). Karl clashes with Libby's boyfriend, Darren Stark (Todd Mac Donald), and a feud between Karl and Darren's mother, Cheryl (Caroline Gillmer) begins.
Karl become attracted to his receptionist, Sarah Beaumont (Nicola Charles).
He helps her to become a nurse and when he comforts her about a break up, they kiss.
Sarah becomes engaged to Peter Hannay (Nick Carrafa) and on the day of her wedding, Karl gives her a lift.
Following the wedding, Karl and Sarah kiss again, before Sarah and Peter leave for good.
She kisses Martin, but realises she loves Karl and they reunite.
Toadie learns of the kiss and tells Billy, who then tells Susan.
She slaps Karl across the face and asks him to leave.
Karl is fined for drink-driving after he has a few glasses of wine at a medical conference and is stopped by the police.
He is banned from driving for six months and his fine is doubled when he attends court.