Embattled traders in St George’s Walk are considering legal action against the council that has, they said, failed to pay them compensation for their loss of business.

Surrey Goldsmiths, Masquerade, Sergios and the Madeira Delicatessen served legal notices on Croydon Council in 2009, arguing it mishandled a 2005 Compulsory Purchase Order (CPO) for Minerva’s £500m Park Place development.

They were told in 2005 they would be compensated by property giant Minerva for the market value of their businesses and the cost of relocating.

However, they said this never happened, and due to the CPO the area became run down with the established businesses losing money.

The traders took the authority to a Lands Tribunal and eventually settled out of court with Croydon Council in May for an undisclosed sum to be agreed and paid out by July 23.

However, two months later, the council has failed to complete its end of the deal, the traders said.

Chris Ross from Surrey Goldsmiths, which has been in St George’s Walk for 40 years, said: “We may have to start legal proceedings against the council for not honouring its offer.

“It is completely ludicrous. We are still paying rent and rates to the council and we have no business.”

Sergio Oriani, 61, who had been trading in the walk since 1973, closed his business on July 31.

He said: “The council is dragging its feet for no apparent reason. We have done everything it has asked of us.

“I have made all my staff redundant and am out of pocket. I am meant to be taking early retirement but two months on, I am still waiting for the settlement.”

Lesley Shepherd, who owned fancy dress shop Masquerade with her husband Terry, said she despaired of ever finding an end to the saga.

After a 15-year fight against cancer, her husband died in July, never seeing an end to the legal battle that consumed the last years of his life.

Mrs Shepherd was taken to court by the council last week for non-payment of rates amounting to nearly £2,744 for August and September.

The case was adjourned after she explained she had closed the shop but was holding stock in it, in preparation for a compensation payment from the council.

She said: "We have done everything the council has asked of us.

"I fear the stress of the past few years aggravated and accelerated Terry’s illness. Terry knew there was an end in sight before his death. He would be very upset at the delay we are facing now."

But a council spokeswoman said the fault for the delay was with the traders.

She said: "The council denies any delay on its part in paying these compensation claims and we are perplexed at being unfairly portrayed as being responsible for non- payment.

"We are prepared to pay, want to pay and have the means to pay. We just need to know how much to pay.

"For this we require formal confirmation of outstanding financial information from the traders in relation to their claims.

"This includes figures on rent payments, for example. We have been chasing this information repeatedly from the traders’ representatives for several months by every means available – letters, phone calls and email.

"Unfortunately, without the figures the council is not in a position to make a final settlement payment.

"However, as soon as we have the details we have been requesting then we will be pleased to pay up immediately. In the meantime we can confirm we have also put an indefinite hold on outstanding rate payments and will consider further how money owed should be collected."