Labour leader Andrew Little upped his offer from $26,000 to $100,000 in a last-minute bid to settle the defamation claim against him by hoteliers Earl and Lani Hagaman but Mrs Hagaman rejected it as too little and too late.

Little's offer was revealed in Mrs Hagaman's evidence at the High Court in Wellington, during which she read out letters between lawyers for the two.

The Hagamans are now seeking more than $2 million in damages from Little over comments he made last year about a $100,000 donation from the Hagamans to the National Party in 2014 and a contract later awarded to their hotel chain - Scenic Hotel - to manage the Matavai resort in Niue.

At the time, the Hagamans gave Little a deadline to apologise and retract his comments, but he refused. Mrs Hagaman said at that point, all the Hagamans wanted was an apology and "minimal" costs: "just a couple of legal letters."

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Mrs Hagaman said in February this year, Little offered the wording of an apology and $26,000.

In response the Hagamans said although they "have no wish to destroy Mr Little by rendering him insolvent," a more realistic offer was needed.

His return offer of $100,000 was also rejected - Mrs Hagaman said her costs by then were already $215,000 and the wording of the apology was inadequate because it did not state there was no link between the donation and the hotel's business interest in Niue.

Mrs Hagaman said Little's comments had associated them with an apparent scandal which had damaged the Hagamans' reputation and that of their hotels.

Earl Hagaman, with his wife Lani, after receiving the CNZM Companion of the New Zealand Order of Merit for services to business, tourism and philanthropy at Government House, Auckland, in 2014. Photo / Brett Phibbs
Earl Hagaman, with his wife Lani, after receiving the CNZM Companion of the New Zealand Order of Merit for services to business, tourism and philanthropy at Government House, Auckland, in 2014. Photo / Brett Phibbs

Mr Hagaman was now very ill and had been given only weeks to live and Mrs Hagaman said she decided to go ahead with the defamation suit to clear his name before he died.

"We are very proud of what we do. We are very proud people. His name is very important to him and it's incredibly important that he does die with dignity - and for our children."

She said it was offensive and "distasteful" to suggest the Hagamans would expect something in return for the donation - they were regular donors to various charities and community groups, including $1 million for the Christchurch Cathedral from Mr Hagaman: "a true atheist".

By comparison, the size of the National Party donation "wasn't big in the scheme of things".

The Hagamans had donated to political parties before, and while the $100,000 donation was the largest that was partly because Mr Hagaman had just found out he was seriously ill.

"Before Earl was diagnosed he was looking at maybe a few thousand, but he thought this could be the last election ... I think it was his legacy to say 'thank you.'" She said it was prompted by Mr Hagamans' admiration of what former Prime Minister John Key had done for the tourism sector - and concern about Kim Dotcom gaining any power.

She said the hotel business was not discussed when the donation was made to National Party President Peter Goodfellow.

"It would have been totally inappropriate." Instead they had talked about the campaign, and Kim Dotcom.

The Hagamans are suing over six separate statements Little made, one in a press release and the rest in media interviews after that. In those, Little had questioned whether there was a link between the donation and the Matavai contract which was awarded to Scenic Hotel soon afterwards, as well as a $7.5 million Government aid fund to upgrade the resort at a later date.

The comments the Hagamans claim amount to defamation include phrases such as: "it looks murky from the outside, it looks shady," "stink to high heaven," "there's just something about this whole deal that really stinks" and reference to National Party's "dodgy deals" such as SkyCity and the agrihub in Saudi Arabia.

Mrs Hagaman said the overall insinuation was that the Hagamans had done something corrupt and she felt they were being targeted.

The Hagamans were seeking compensation totalling $2.3 million - $500,000 each for Little's initial press release in 2016 after reports about the donation and the awarding of the Matavai contract and $100,000 each for comments in five interviews after that with a further $300,000 in exemplary damages.

The Hagamans' lawyer, Richard Fowler, urged the jury not to let politics get in involved in their decision

The trial will continue on Tuesday with Mrs Hagaman's cross-examination by Little's lawyer, John Tizard.