Pam and Gaby are talking about her going to University - Gaby still isn't very keen. Pam finds a silk sock in the washing basket and wonders whose it could be. Meanwhile, Doug comes in looking depressed and says they're going to have to take a big loss on the guesthouse. That means they might have to sell up in Ramsay Street.
Felicity has been out to the mountains to inspect the guesthouse and wants to make Paul an offer. He plays a good game and chokes on his tea. Even when Felicity offers him $400,000 he says he's not prepared to give the place away. He shows Felicity out.
Caroline comes in and Paul cackles in glee.
The police officer is telling Karen that her case isn't very strong - she didn't report the case and also tried to pin the pregnancy on someone else. It's going to be very hard to prove assault - it'll be Karen's word against his. The defence will try to prove that she has a deceitful nature and subpoena the Robinsons to give evidence against her. It's not fair, but it's the way things are.
Dorothy pops around to remind Doug that he's left his tools in the ute. Dorothy tells Pam about Erinsborough High being closed down through economic incompetence. She doesn't intend to take in lying down - she's going to formulate a battle plan.
Willises, the following morning
Gaby and Pam are off to the gym. As they're leaving, Felicity Brent pops around. Doug is still in his dressing-gown, but offers her a coffee. She gets to talking about Paul Robinson and reveals that she's made an offer on the guesthouse and she's surprised that Paul has turned her down. Doug is stunned to hear that Felicity is offering $400,000 but calmly offers to talk to Paul about it.
FELICITY: I can see you're the sensible one in the partnership. Call me any time!
Lucy is apologising to Karen for being so awful to her. Karen says that Lucy had every right to be suspicious and they'll just forget it.
In the kitchen, Lucy tells Glen how wrong she's been about Karen. He and Jim looks a bit surprised, but pleased. Then Lucy confesses that she's quit the modelling - it was awful and Jim was right. Jim hugs her and says there's nothing to be ashamed of.
Doug is waiting to see Paul. Christina is surprised to hear that Caroline is going to a dinner with Paul on Saturday night instead of her. She looks a bit disappointed.
In the inner office, Doug tells Paul about Felicity's visit. He advises Doug to get back to Felicity with a big sob story that Paul won't sell under $450,000.
Glen tells Karen that there must be more evidence to convict the lawyer - he must have been harrassing other girls in the office. Karen tells him that she's decided not to go to court - in fact, she's already settled with him for $50,000. She can't win the court case and $50,000 will secure the baby's future. Glen asks if he can borrow the cheque for a while.
Pam is dying of fatigue on the machines while Gaby easily exercises on a rowing machine(!)
Karen is writing a note when Glen comes in. He showed it to the senior partner to show what a sleze his employee is. Karen says that the money was given to her in good faith but Glen says now he'll lose his job too - it's more of a punishment. Glen goes off to get Karen some information on single mums.
KAREN: Glen? Thanks. Thanks for everything.
When Glen has gone, she leaves a note of him on the desk.
Jim comes in to find Lucy brooding a bit. She tells him that Doug wants to see him about a buyer for the guesthouse. Glen comes in.
GLEN: Where's Karen? Is she in her room?
LUCY:(gently) Glen, she's gone.
She shows Glen the note.
KAREN:(voiceover) I'm sorry, but I didn't know how to leave without dumping another problem on you. It's time for me to go. Thank you for believing me. Even when you found out the truth about the baby, you stuck by me. I didn't have the strength to fight in court, but the guy has to live with himself and that's a pretty heavy punishment. I'll always think of you Glen. And I'll always want the best for you. I hope you can put all this behind you and have a great life, you deserve it. All my love, Karen.
Glen is shocked. Lucy says Karen had to do what was best for her.
Doug is telling Jim about the guesthouse deal. He doesn't tell him about Paul's dirty tricks campaign and Jim signs the contract for $450,000. Doug rushes straight off to see Paul.
Dorothy, Pam and Gaby come in. Dorothy talks to Jim about the school closure - she's now reached the indignant phase and has spoken to the parents. She's going to gather enough opposition to put a spanner in the works.
Christina answers the door to Gaby - she's brought Paul's silk socks back. Gaby notices that Christina is crying and she tells her that she hates her husband.
PAUL: Paul is ashamed of me. He's really embarrassed by the way I look.
GABY: Don't be silly! The way I hear it, Paul's mad about you!
PAUL: That's what I thought until today!
She pours out the story abou Paul taking Caroline to the business dinner. Gaby says it's probably for business reasons. But christina reckons Paul doesn't want to be seen with her while she's "fat and ugly".
Doug pops around with a celebration beer for Jim. He thinks there's something odd about the whole deal though and Doug is forced to admit that the buyer doesn't know about the dam plan. Jim says it's totally unethical. He's surprised to hear that the buyer is Felicity Brent, but says it's still unethical. He'll have to talk to Felicity before she signs the deal this afternoon.
JIM: Someone has to tell her what she's getting herself into.
DOUG: Please, don't, please! This is the only hope I've got of getting out of this mess!
Jim says he knows it's tough, but it's the right thing to do.
DOUG: I'm begging you. Don't do this to me.