No criminal prosecution was brought and Mrs Cooke, who was found to have had no part in either the arson or the fraud, walked out on her husband shortly after a ruling on the fire in 2012.
They have since been battling over assets estimated to be worth £6.6million ($12.8 million).
At a hearing of the Family Division of the High Court today, Mr Justice Holman said the couple were heading for a "catastrophe" and urged them to negotiate.
"They have spent a third of their wealth," he said.
"These people have completely lost touch with reality. I don't know where the responsibility lies. It's probably shared."
The judge estimated that about another £200,000 ($386,000) would be spent on lawyers if agreement was not reached and a trial took place.
The pair first met when Mrs Cooke's sons were at the same school as Mr Parker's sons. Both Mrs Cooke and Mr Parker's marriages had recently ended and they began a relationship in 2004.
She later moved into his state-of-the-art seven-bedroom home complete with library, swimming pool, cinema, six-car garage block and detached staff bungalow, and both had high-flying business careers.
Property developer Mr Parker also ran a company specialising in equipment for obesity surgery, while his wife supplied luxury towels.
But after the fire at Mrs Cooke's £1million bungalow in 2009, the marriage fell apart.
A judge found that, on the balance of probabilities, there was no explanation for the fire "other than it was set by persons on the direction of Mr Parker".
They are now arguing over the towel company BC Softwear.
Mr Parker insists it was a family business, while a source close to Mrs Cooke has previous said she insists she built it up.
Fraud and arson that fuelled split
2001: Mrs Cooke creates towel empire BC Softwear, which supplies to customers including London's Dorchester hotel.
2004: Mr Parker and Mrs Cooke, who met while their sons were at school together, begin their relationship. Mr Parker later names his £4million, 10-acre Buckinghamshire estate 'Babs Park' in her honour.
2006: Mrs Cooke makes her boyfriend a director of BC Softwear.
2009: While she is living at Babs Park, Mrs Cooke's £1million bungalow in Farnham Royal burns down. Mr Parker denies involvement.
2010: Mr Parker, 54, and Mrs Cooke, 57, marry at High Wycombe Register Office in April.
2012: Judge finds, on the balance of probabilities, that Mr Parker arranged arson attack on Farnham Royal in failed insurance fraud. The house that replaced it is at this point worth £2.5million. Mr Parker was ordered to refund his insurer.
Same High Court hearing finds Mr Parker made two fraudulent claims on watches he claimed were stolen. He was ordered to pay £55,000 to his insurer.
No criminal prosecution is brought against Mr Parker. Mrs Cooke is found to have had no part in arson or fraud. Shortly after she leaves her husband and moves to rented accommodation.
The ruling meant neither Mr Parker nor Mrs Cooke was entitled to be indemnified by insurers.
