Damp/dry rot problem/insurance - help!

There is a fine and generous community in this forum. Wonder if any of you can help me.

I am not sure what is causing our problem under the floor of our front room in our bay fronted Victorian terraced house. I am left confused by the definition of what the problem actually is. Photos are attached here. I emailed these pictures to Strand preservations (the company that gave a 30 year guarantee to the developer who refurbished this house – and whom we bought the house from). Strand say it looks like dry rot. The developer that we bought the house from just over 2 years ago, thinks it is wood rotting fungi.

We noticed the problem after a year of being in the house – there were areas of black inside a cupboard on the internal part of the wall, where externally the rainwater drain runs, also the skirting boards split and the laminate floor had dark patches and was bulging . We made an insurance claim. The builder that did our insurance repair last year, said it was wet rot (incidently not covered by our policy – I suspect the contractor twisted the truth so that he could get the work, but I cannot prove this.) Anyway, the insurance contractor sub-contracted someone else and he replaced some timbers, treated them and made good the area internally. Perhaps he did not treat a wide enough area - as the problem has moved from the edge of the front room (where he treated) into the middle. We rang our insurance company, who said that it was regrettable that the contractor they instructed failed to tell us that the source of water ingress was likely to be a defective external drain from rainwater pipe. (This also may not be covered under our policy as it may be ‘wear and tear’) So, the subcontractor went ahead and fixed an internal problem, without dealing properly with the source externally. I have lodged a complaint with our insurers Liverpool Victoria on this today.

I strongly suspect, however, that something has not been treated thoroughly enough in the first place. Strand preservations were asked by the developer we bought this house from back in June 2004 to 'determine the presence & extent of problems relating to:

1 Rising Dampness

2 Wood boring insects/wood rotting fungi'

Strand highlighted in their report that they observed the following:

High external ground levels
Insufficient sub-floor ventilation
Areas of moisture ingress noted
Fungal decay evident

Strand then make these recommendations - to be done by the developer: (none of which, I suspect were done)

Reduce external ground levels or Sika tank earth retaining walls (ground level was not reduced - victorian mosiac tiles are/were undisturbed. Not sure if the Sika tanking was done)
Add more air vents (this was not done - there is still only one in the middle of the bay window, there are no other vents on either flank of the bay, nor are there vents at the back of the house allowing a through flow of air. DO I HAVE A CLAIM AGAINST THE COUNCIL FOR PASSING THIS WORK?)
All actual and potential sources of moisture ingress to be rectified (I do not know if this was ever done no-one has told me where this is/may be)
Suspect areas to be exposed to allow full inspection (the developer assures me this was all done - for the District Surveyor & for Strand - I can only take his word for it)
All decayed and defective timbers to be replaced using new pre-treated timbers to be fully isolated from the oversite/masonry (all I have been told by the developer is that Strand injected a vertical DPC - to ensure the horzontal DPC was not breached - and did a ‘standard spray’ of the timbers - again I have to take his word and assume he sprayed all wood beneath the floorboards). It looks from the paperwork, that this cost £600 + VAT. – I suspect this was insufficient and all done on the cheap, to get a guarantee to show the surveyor, but it is difficult to prove this.

If it is Dry Rot, Strand have told me it would take two/three years to develop to the level we have it at. We are getting them to come back – under heavy protest for free and only by saying that we’ll need someone to do this work – can’t they see it as quoting for the work? Ideally, ofcourse we would like them to do it under guarantee. But no-one thinks they will. They’ll just say they treated what they needed to at the time. They may even use the excuse that they could not access all areas during the development to have fully investigated any problems in that front room. We will see.

Finally, our mortgage lender appointed our surveyor, Colleys, and we had a home buyer's report carried out. - Maybe in hindsight, the scope of this was limited as by the time they looked, all floors were covered up. All it said about the area in question was: 'a large concrete surround is present to the rain water gulley to the front. I was led to believe by the builder that a vertical DPC has been fitted behind this to prevent breach of the horizontal DPC'. In the 'matters for conveyancer' section at the end of the report, it said 'I understand that damp proofing and timber treatment has been carried out and your conveyancer should make sure there are adequate guarantees'. WELL, THERE’S A GUARANTEE, BUT HARDLY ADEQUATE!

Who is accountable? The developer – has he done a quick fix, cover up job to get the property sold? I suspect he had cash flow problems for his other developments.
Strand Preservations – for not doing a thorough check, doing a quick and relatively cheap fix on behalf of the developer (whom he gives a fair amount of work to), who failed to identify or name the problem as dry rot two and a half years ago. Both of them?
The council – for allowing it to pass building regulations, when clearly there is sub-standard ventilation and checks have not been thorough enough?
The people that did our survey – it cost us £700 for them to say ‘the scope of our report is limited’ – too right it was – they leave it to the solicitor to ensure there is an adequate guarantee.
Our solicitor – yes, there is a guarantee, but it’s worthless. Turns out, because the developer did the finishing render, Strand did not complete the work – the developer did

Can anyone help?

Please.

Bojangles