And as a result, the family may now be forced to pay their opponents’ legal costs, which could leave them penniless.

On October 23, 1999, Scots College student Nathan Chaina, 15, fell into a flooded river at Kangaroo Valley and drowned while he and his brother, Mathew, who witnessed the tragic accident, were taking part in a hike as part of a school camp.

A coronial inquest found the school was liable for the death because it failed to properly prepare the students for the difficult conditions they faced and ignored the day's weather forecast.

Nathan’s parents launched a major legal claim against the school, claiming damages not only for nervous shock but also the impact on their cleaning products business.

The boy’s parents initially sought more than $300 million in damages, claiming they were prevented from launching a revolutionary new cleaning product that would have taken the market by storm.

But a Supreme Court judge awarded the couple just $492,373, finding that they were capable of returning to work in some capacity a few years after the accident.

On Friday, it emerged in court that in February 2003, soon after the Chaina family first launched legal proceedings, the school offered them a settlement which was greater than that which they eventually received.

“An offer of compensation was made during the discussion which took place soon after these matters first arose,” said Robert Stitt, QC, counsel for the Presbyterian Church, which runs Scots College.

“The plaintiff's verdict has not exceeded those sums.”

It is normal legal procedure that when a “reasonable” settlement offer is rejected by the plaintiff in a case, they can be pursued for the costs of the hearing after that settlement was made.

Fairfax Media understands the church will follow that procedure, and seek an order forcing the Chaina family to pay the church's legal costs since 2003.

This is likely to run to millions of dollars.

The family’s claim for interest to be charged on the damages award dating back to 1999 is also in doubt because of their rejection of the original offer.

The matter will return to court next month.