LATEST: Sir Paul McCartney and Heather Mills are closer to a divorce settlement than ever before, according to a close pal of the former beatle. The estranged pair attended a meeting before a judge at London's Royal Courts Of Justice on Thursday (11Oct07), but failed to agree on the terms of their divorce despite eight hours of talks. MCCartney and Mills, who wed in 2002 before splitting four years later (06), were keen to settle the dispute ahead of their daughter Beatrice's fourth birthday on 30 October (07). MCCartney has reportedly offered Mills $40 million (GBP20 million) - but she is holding out for $100 million (GBP50 million). But contrary to British tabloid reports claiming the former couple are stuck in a deadlock over their financial settlement, MCCartney is said to be "very relaxed and happy" about the progress they have made, and is confident they will reach an agreement by Christmas. A source tells U.K. newspaper The Sunday Mirror, "They are the closest they have been for years - and delighted the end is in sight. "They are both going to be at Bea's birthday party at the end of October - and want to have good news for everyone."