I think you need to read the planning policies for your area, have they cited the policy the “shut in” refers too. If it’s a block of flats surely most would be looking over your build. Hardly shutting out light 🤷♂️
However, if I may, his original build is not passive, no cavity no wall insulation, perhaps no DPC and years of damp build up within the old stone. I am sure with lots of heat and ventilation the damp could be removed but it won’t be quick.
Rather than noggins I used to use off cuts of ply or chipboard across an unsupported join in plasterboard for a bit of rigidity, yes my plasterer said it was not necessary but I do tend to over engineer stuff (plus it used up scrap off cuts).
I think position and amount of solar gain makes a huge difference, Wales is wet by nature. The cottage I referred to above was in a deep valley so very little solar gain or wind drying effect. It’s a shame @zoothorn heating was a fiasco in the first place.
To my mind that’s unfair, if the design is based on the original footprint then that is a constraint, changing from timber to brick and block is a complete change. How much would she have to change (ceiling height, ridge height the odd window position etc) to not have to pay their design cost. I would fight it but ask them what their design cost would be beforehand.
Well despite me designing our build i used an architect to transfer my pencil and paper drawings to CAD for the council application, he got it wrong three times before I accepted it as correct 🤯
Or dig out, drill into existing footing on the side and wallop lengths of rea bar into it leaving enough proud into the new footing along side the existing to tie the two together.
You can paint caulk but not silicone, silicone will be more flexible so more ideal for a joint between different materials , plasterboard and UPVC.. Foreverwhite as @Onoff says is ideal.
Building regulations control how things are built which do not cover local environment conditions (which is what you say causes the problem), if it was built without a DPC the building inspector should pick that up during the build. I firmly believe this damp/mould thing will not fail your inspection, also the BCO will advise on any problems he finds and asks you to remedy. You will not get fined or sent to prison fir a fail, just ask you to remedy what he sees as not right.