Actor Hugh Grant has settled a privacy case against the publisher of the Sun newspaper, saying he could have faced a bill of up to £10m even if he had won.

The star was suing News Group Newspapers (NGN), claiming journalists had used private investigators to tap his phone and burgle his house.

He said he “did not want to accept” the “enormous sum of money” he had been offered to settle – but that a trial was likely to prove “very expensive”.

NGN denied the claims against it.

The company said the out-of-court settlement was reached “without admission of liability” and that it was “in both parties financial interests not to progress to a costly trial”.

After the unexpected resolution, which was revealed at a preliminary hearing on Wednesday, Grant posted a statement explaining that continuing to fight the case risked making him liable for substantial legal costs.

“I would love to see all the allegations that they deny tested in court,” he wrote.

“But the rules around civil litigation mean that if I proceed to trial and the court awards me damages that are even a penny less than the settlement offer, I would have to pay the legal costs of both sides.

“My lawyers tell me that that is exactly what would most likely happen here. Rupert Murdoch’s lawyers are very expensive. So even if every allegation is proven in court, I would still be liable for something approaching £10 million in costs. I’m afraid I am shying at that fence.”

The actor added the money had a “stink” about it, and therefore the funds he has received will be “repurposed via groups like Hacked Off into the general campaign to expose the worst excesses of our oligarch-owned press”.

Campaign group Hacked Off said: “The allegations of burglaries and theft which formed Mr Grant’s claim are devastating. Yet again, rather than see them tested in court, News UK have done everything to avoid facing accountability.”

Grant’s was one of several cases that were eligible to go to trial at London’s High Court in January.

The actor, alongside the Duke of Sussex, was suing NGN for alleged widespread unlawful information gathering. Prince Harry is continuing his legal battle with the company.

Speaking to BBC Radio 4’s Media Show, Jake Kanter from media news website Deadline said the settlement was “a surprise for some”, adding that Grant had “been a thorn in the side of the British tabloids for well over a decade now”.

“And there’s been a thought that Prince Harry, who’s been taking legal action against the newspapers, has emboldened others to the same, and he [Grant] is part of that process.”

Kanter added that Grant’s settlement “could be a blow to the proceedings” if Harry’s legal team go to trial in January.