The Tories are facing a £700,000 legal bill for trying to hold on to a £10 million bequest from a mentally unfit tycoon who believed Margaret Thatcher could save the world from Satan.

A High Court judgment has ordered the Conservatives to pay legal costs on behalf of the family of Branislav Kostic, a pharmaceutical millionaire from Ealing, West London.

He had left his entire fortune to the Tories after experiencing a mental breakdown. He cut his relatives out of his will after telling them that they were part of an international conspiracy of dark forces out to kill him.

In October the High Court ruled that the Tories were wrong to contest a claim from Mr Kostic’s son, Zoran, that he was mentally unfit when the bequest was made. Mr Justice Henderson ordered the Tories to pay £275,000 immediately to Zoran, according to court papers obtained yesterday.

It is understood that the family will claim at least £650,000 in total costs from the party at a hearing later this year. Mr Kostic died in 2005 at the age of 80, leaving £8.3 million, understood to have grown to nearer £10 million.

The £10 million, which had been held by the court during the case, was ordered to be handed over to Zoran Kostic.

The Belgrade-born tycoon had been a loving family man until, in the mid1980s, he became gripped by delusions that soured his relationships with relatives, friends, advisers and colleagues. He accused his wife of stealing his passport and believed that his mother and sister had conspired to kill his father and brother-in-law.

In an earlier hearing the family said that their attempts to retain contact with him were rebuffed and that he even refused to eat the chocolates they sent him at Christmas, because he thought they were poisoned.

In a note to Scotland Yard, he reported that a 100-strong international vice ring was attempting to poison him. In the midst of his delusions, he saw Mrs Thatcher’s Tories as a bulwark against the “satans”, and in 1985 wrote to the Prime Minister imploring her to save the world from “bestial monsters”.

“It seems to me that someone (not Gaddafi, IRA, Palestinians or Mafia, they are only the marionettes) organised many years ago a type of international university to study human weakness . . . I am sending a cheque for £5,000 to fight the evil wicked demons and satans and I am fully at your disposal,” he wrote.

Although Tory policy was to refuse donations where there was any doubt about a benefactor’s capacity to donate, Mr Kostic’s offerings were accepted with few questions asked.

Mr Kostic had in 1974 made a will leaving his riches to Zoran, aged 17 at the time. But in 1987 he wrote to David Mellor, his MP: “I have to make my will . . . It is important to me that this wealth doesn’t finish up in the hands of destructive people – satanic monsters.” Mr Mellor declined to assist.

Nevertheless, Mr Kostic was introduced to the Tory-connected legal firm of Trowers & Hamlins through party channels.

In one letter in May 1989 to Anthony Trower, Mr Kostic sent a “semi-intelligible, antiSemitic rant”, according to the judgment. He enclosed an article from The Times by the late Bernard Levin with a donation of £3,000 to mark the tenth anniversary of Mrs Thatcher’s premiership. In it, he referred to Levin as one of “the Chosen Creatures”. Mr Trower replied: “I shall reread with interest the two articles by Bernard Levin.”

After a long lunch with Mr Trower at Simpson’s-in-the-Strand, Mr Kostic signed a fresh will leaving his entire estate to the Conservatives.

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