Hotel chain owners Earl and Lani Hagaman have confirmed they are taking defamation action against Labour Party leader Andrew Little after he refused to apologise for comments he made last month.

The Hagamans, who own Scenic Hotels Group, had set Mr Little a deadline of 5pm today to retract his statement about the management of a resort owned by Matavai Niue Limited.

In a statement released this evening, Lani Hagaman said she would "see Mr Little in court".

"The reasons we're taking defamation action have been widely reported in the media and I won't be repeating his allegations that Earl and I find hurtful, highly offensive and totally false", she said.

"While Mr Little may be entitled to call for an investigation there is a correct process in which to do this. In my opinion a public flogging is not the correct process.

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"We're incredibly disappointed he hasn't apologised and retracted what he said."

A spokesman for Mr Little said this evening that the Labour leader had written to the Hagamans' lawyers today.

"He has informed them that, as Leader of the Opposition, he has a constitutional duty to challenge the actions of the Government over the expenditure of public funds.

"Mr Little will address the issues raised by the Hagamans once the Auditor-General has dealt with the referral, either by concluding an investigation or declining to conduct one."

On April 18, Labour called for the Auditor General to look into Scenic Hotels Group's contract to manage the Matavai resort after it was discovered that Mr Hagaman, gave a $101,000 donation to National the month before the contract was announced in 2014.

Mr Little said at that time that the close timing of the donation to the awarding of the contract "stinks to high heaven".

He compared the Scenic Hotel Group's resort contract with what he described as the Government's "dodgy deals" with SkyCity casino and a sheep farm in Saudi Arabia.

"New Zealand money, which was earmarked as aid for the island nation, has instead been given to upgrade a resort run by a National party donor," he claimed.

Foreign Minister Murray McCully dismissed his allegations, saying that they were "utterly baseless".

Lani Hagaman said defamation proceedings were now being prepared and would be filed soon.

"If Mr Little had taken the time to get to know us he would have found out that neither Earl nor I come from power or privilege, nor upbringings that cultivated expectation of favours," she said.

"We are simply hard working people. While age and health issues are against Earl this donation was something he personally wanted to be able to do."