Mirror journalists listened into voicemail messages from Princess Diana while Piers Morgan was editor of the newspaper, Prince Harry's lawyer has claimed at the High Court.
The Duke of Sussex did not attend the hearing in London on Monday despite being in country - much to the judge's "surprise".
He is attempting to prove that - for two decades - stories were written about him using information that was illegally obtained through phone hacking and voicemail interception, blagging, and the use of private investigators.
David Sherbourne, acting for the duke, showed the court letters written by the late princess to comedian Michael Barrymore, which reveal she had secret meetings with the star.
Mr Sherborne said Barrymore was "struggling with coming out as gay" as well as an addiction to drink and drugs, and that Diana was meeting to comfort him through a difficult time.
In one letter, dated March 1997, she writes: "Dear Michael, what joy it was to finally meet you tonight. I did want to emphasise that I'm here for you, whatever, whenever. It's very easy to pop round and see you."
In a later letter, she says she was "devastated" to hear the Mirror was telephoning her office to ask about "six meetings supposedly between us".
"Nobody knew about our conversations/phone call. How deeply sorry I am [that] what I considered to be a private matter has become public property," she writes.
Mr Sherborne argued that "plainly the Daily Mirror has been listening in to the voicemail messages" between the pair.
He said that in former Mirror editor Piers Morgan's book, The Insider, he refers to "rumours" that Diana was "secretly comforting" Barrymore and that he was being treated for alcohol addiction.
The lawyer argues the only way the Mirror could have found this out was through intercepting voicemails.
Mirror Group has said it used documents, public statements and sources to legally report on the prince.
Media lawyer Jonathan Coad, who was in court alongside Sky News staff, said the Princess Diana claims were "a bit of a bombshell".
He told Sky News:
"The first allegations concerning both Princess Diana and Piers Morgan have arrived at the same time.
"The allegation is that while Piers Morgan was the editor of the Mirror, Michael Barrymore and Princess Diana exchanged letters.
"She writes to Michael Barrymore. And in a second letter, she says, I'm so sorry, our secret meeting has been discovered.
"What David Sherborne is saying is that in the first letter, Princess Diana explained they'll be speaking on the phone. And here's my phone number.
"David Sherborne says that what's obviously happened is that Barrymore left a message. They hacked it and they discovered about this secret meeting."
The trial is expected to last seven weeks.
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