Finally, after two weeks, 2 e-mails, and 2 transferred calls I've got my answer from the CAA. My interpretation was correct.
Dear James,
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Your interpretation of IN-2013/061 is correct, provided you pass both the Flight Performance & Planning and Navigation papers before 31 August 2013, you can sit all outstanding papers to the new syllabus from the 1 September 2013 to complete all nine subjects.
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Kind regards,
*
Martin Davis
Senior Licensing Standards Inspector
UK Civil Aviation Authority
Gonna pass this on to my flying club and hope they have a discreet word with the examiner and any other students she may have mis-lead.