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Wednesday, 11 April, 2001, 16:51 GMT 17:51 UK
Sir Elton: What the judge said
Sir Elton John
The judge noted Sir Elton's 'extravagant propensities'
The judge in the court case brought by Sir Elton John over tour costs, Mr Justice Ferris, said the singer was "uncommonly generous" - but concluded that he should have been more careful in examining his business arrangements.

Sir Elton, 53, tried to sue Andrew Haydon, the former managing director of John Reid Enterprises (JREL) - his former management company - and City accountancy firm PricewaterhouseCoopers (PwC).

But the court found that Mr Haydon, 45, was not negligent in allowing JREL to charge the singer overseas tour expenses, including booking agents, accountants and producers.

Sir Elton's indifference to the details of financial and business matters was for a long time compounded by the fact that he had serious problems with alcohol and drug abuse.

Mr Justice Ferris
Reading a summary of his lengthy judgment to the court, Mr Justice Ferris said the action arose out of events which led up to Sir Elton terminating his arrangements with JREL in May 1998.

The judge referred to a a succession of formal management agreements with JREL - who managed Sir Elton's career for more than 20 years - the last three of which were signed in 1986, 1992 and 1997.

Sir Elton argued the legal effect of the agreements was that JREL and not the singer himself should take over paying for fees and expenses from Sir Elton's tours.

Mr Justice Ferris explained that under this "admittedly unusual" arrangement JREL was compensated for paying out for tours by getting a the "generous" payment of 20% of Sir Elton's gross inclome.

"However, the agreements were operated by JREL in such a way that the relevant fees and expenses [the tour agents' costs] were borne not by JREL but by one of Sir Elton's companies," he added.

Sir Elton John with David Furnish
Sir Elton with his partner David Furnish
Sir Elton did not bcome aware of this until 1998, when he "complained vigorously" to John Reid and JREL and demanded compensation.

This action led to Sir Elton accepting $5m (3.4m) in compensation from John Reid, 51, his former partner and manager.

The action ruled upon on Wednesday came about because Sir Elton and his companies felt the amount paid by Reid was much less than the sum they had lost - and they had only accepted it because they knew JREL could not afford to pay more.

They then proceeded to take action against Andrew Haydon JREL's former managing director, and City accountancy firm PricewaterhouseCoopers.

Mr Justice Ferris said all parties were agreed that the management agreements - which were clearly not to Sir Elton's advantage - were attributable to the "generous disposition" of the singer and his close relationship with Reid.

But he added that Sir Elton is "a man of great intelligence" and as such should have examined his business matters more carefully.

"Sir Elton's indifference to the details of financial and business matters was for a long time compounded by the fact that he had serious problems with alcohol and drug abuse", said the judge.

He said that Reid too suffered from these problems but that they overcome them - in Reid's case with the help of Sir Elton.

Sir Elton John
Sir Elton leaving the court after giving evidence last November
But their business dealings subsequently suffered, but only when his financial advisors kept telling him that he should cut his spending.

"He found this difficult because of his extravagant propensities and because he did not see why he could not spend what he wanted when he knew that his earnings were very large indeed," said Mr Justice Ferris.

"It seems he began to doubt the efficacy of John Reid's management and to feel that too large a proportion of his own earnings were being paid to JREL."

The singer now faces a legal bill of about 8m.

See also:

11 Apr 01 | Showbiz
Sir Elton may fight court ruling
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