If settle then no court

I am not familiar with your department of civil right (canada?), so I cannot say who is right.

But I would at least stay on fighting a little longer. I would not settle at first round of settlement discussion. Is your LD a person good at negotiation? Sometimes negotiations is a lot of bluffing.

You said it yourself, "又說我們可以counter-offer", this is merely a negotiation tactic. 

Who signs 4 year lease?  even if their monthly damage of $100,  people usually sign 1 year lease, their damage is at most $1200.  As you said, it is not certain they even qualify with your review process, I'd counter offer $500 and never settle above $1000.