Thankfully I have a quick save before the event so I've tried this a few times but to no avail.
I'll start trying some different conversation options tonight and see if any of them work. I initially thought the bug was caused by one of the NPCs getting the killing blow on the last hostile enemy but after I ensured I did the last hit, no change.
Here's hoping this is fixed soon, because I'm going to stop playing until I can get the Paladin (since there's no Barbarian or Monk NPC )