Is this true about out of court setlements ?

Yes but the money has to be lodged in court i.e. the offer has to be made official before the case starts though I'm open to clarification. If the offer is made in a smoke-filled room and you end up getting more, that situation you described doesn't apply.

Before a libel trial the defendant could offer, say 50K, to the plaintiff. If he refuses this offer and the defendant thinks it's a fair offer then the defendant can lodge this amount of money in court and if the award is less than 50K the plaintiff has to pay all costs incurred by both sides after the offer was made on the basis that he prolonged the case and needlessly put the defendant through the hoops when he could have accepted a higher offer than what he was eventually awarded.

In the case of defamation trials the jury is not allowed to know that such an offer is on the table as if they knew if would skew their numbers to higher than what was on offer regardless of whether it was a fair amount or not.