The Conservatives today lost a High Court battle over a multimillion pound bequest from a mentally deluded man who believed that only Margaret Thatcher could save him from an international satanic conspiracy.

Branislav Kostic, a Belgrade-born businessman, changed his will in the late 1980s to give his entire fortune to the Tory Party after deciding that his relatives were part of a plot to kill him, and that his solicitors and accountants were part of a conspiracy to destroy the world.

The £8.3 million bequest - now thought to have grown to nearer £10 million - would have constituted the Tories' biggest ever gift, surpassing the £5m given to the party by Stuart Wheeler and Sir Paul Getty.

However, passing judgment at the High Court today, a judge ruled in favour of Mr Kostic's only son, Zoran, that his father - who died in 2005 - was suffering from a serious and untreated mental illness and would not have given the money to the Tories if he was of sane mind.

Mr Justice Henderson's judgment means that an initial will drawn up by Mr Kostic in 1974, in which he made Zoran the sole beneficiary, is automatically validated and the Tories will not be allowed to claim the bequest.

Mr Kostic, from Ealing, West London, died aged 80 in 2005. He had made his fortune dealing in pharmaceutical products and precious metals.

Clare Montgomery, QC, representing the disinherited son, had argued in court that the Serbian had been suffering from a long mental condition that had never been treated.

"Rare flashes of insight apart, Bane [the donor's nickname] had no understanding of his illness, nor of the impact it had on those around him," she said.

"Although his disorder was treatable, he did not seek professional psychiatric help. The Conservatives only benefited because Bane was mentally ill."

The tycoon's son had claimed that he had been gripped by delusions from around 1984, believing that he was a victim of "a devilish organisation" run by "three monster ladies".

His paranoia poisoned his relationships with his wife, sister, mother, friends, advisers, bankers and colleagues, the court heard.

Mr Kostic accused his wife of stealing his passport and money and being a nymphomaniac with numerous male and female lovers, the family claimed, while he believed that his mother and sister conspired to kill his father and brother-in-law.

Explore UK News

• Crime News

• Education News

• Health News

• Scotland News

Times Recommends

• Thalidomide is story of pain and neglect
• Mum’n’dad vote will decide the next election
• Socialite wife in a class of her own