Labour leader Andrew Little would have had to mortgage his home to pay a $100,000 settlement offer before a defamation case went to court, he has revealed.

Hoteliers Earl and Lani Hagaman are suing Mr Little for $2.3 million in a defamation suit being heard by a judge and jury in the High Court at Wellington.

The suit stems from comments Mr Little made in a press release and subsequent radio and television statements in April last year about a $100,000 donation made by Mr Hagaman to the National Party.

The donation was made a month before his company, Scenic Hotels, was awarded a contract to operate Niue's Matavai luxury resort.

Advertisement

The resort is heavily funded by the New Zealand government and is owned by a trust on behalf of Niue's government.

Mr Little took the stand for the first time on Wednesday morning saying he made attempts to settle the matter outside of court but was frustrated by the Hagaman's unwillingness to participate.

"I was feeling somewhat frustrated that efforts to resolve the matter ... was going nowhere," he said.

"Nothing ever seemed to be acceptable."

The first open settlement included an offer of an apology and $26,000 to cover costs, while the second included an apology and an offer of $100,000.

Mr Little said that was the most he could afford.

"That was the figure that I could offer, funded through in the end a loan secured over our house to achieve that settlement," he said.

Both offers were refused by the Hagamans who claim their legal expenses already exceed $250,000.

Mr Little said that amount seemed excessive and included the cost of a public relations firm which he would not pay for.

He also told the court his comments had been directed at the government.

"[The] government has a strong track record of conducting itself in a way that failed to respect the basic principles of the matters of conflict of interest," he said, giving the Sky City deal, Saudi sheep deal and the Panama Papers as examples.

"Then this story broke ... it was enough to pique my interest."

Mr Little said he referred the matter to the auditor general before releasing his media statement or taking part in any interviews.

"I wanted an assurance that this wasn't yet another example of the government bending the rules, not acting on conflicts of interest appropriately," he said.

Mr Little also addressed the comments he made in radio and television interviews, telling the court that some of those quotes were selected from longer interviews.

Earlier, former Scenic Circle director Trevor Scott said he had been concerned a suggestion of corruption involving the Hagamans would tarnish his reputation by association.

"I was extremely concerned in the belief that there may have been perhaps some truth in this ... that in fact they may have been foolish enough to have been involved in what was being alleged," he said.

"When one makes a statement like that it's usually based on very hard facts and that concerned me."

The trial is continuing.