FLR M Spouse cost of using wrong form over six month waiting

[Jalawe]

IMMIGRATION HISTORY

On 16th June 2011 I launched an application for further leave to remain on form FLR (O) because my wife is a serving member of British Armed Forces as a dependant of exempt HM forces. My initial spouse visa was expiring on 06th July 2011 which I got in my country on 21st August 2009 after our wedding on 26th July 2009.

On 20th June 2011 i received a letter of acknowledgment of my application.

On 10th August 2011 I received a letter from UK Border Agency stating that my application is invalid because my wife was naturalised on 28th September 2010.Being a British citizen I need to apply using the form FLR(M) as a spouse of settled person.

The same letter stated and I quote. "Arrangements will be made to refund any fee which you have included with this invalid application if we do not receive a valid fresh application within 21 days of the date of this letter” this letter was dated 4th August 2011.

On 11th August 2011, I made a fresh application on form FLR (M) and didn’t enclosed any fee because I made it within 21 days as per letter indicated and was correctly sent to the address R-label.

On 12th September 2011, I received my refund of the fee yet my application was still being processed.when I called UK border Agency was told there must have been a mix-up and they will investigate on what happened.

On 23rd September 2011, I have received my documents and a letter stating that my application is invalid because no fee has been included yet was advised in the said letter that any application made within 21 days I do not need to send any fee.
On 27th September 2011 i received an acknowledgement of my fresh application on 23rd September 2011.
On the the 26th October 2011 I went to Durham post office to do my biometrics as advised on your letter dated 20th October 2011.

Up to now I have not heard anything from them I have called, written to them to no vail saying the application is still with the home office yet it’s over six months now.

MY INQUIRY

I have been looking on immigration forums and have learnt that invalid application leads to overstaying because you are notified after your current leave has expired and any subsequent application is out of time and leads to refusal with no right of appeal.

Am not being pessimistic but if am refused with no right of appeal based on overstaying due to my honest mistake and their mistake as explained above do i have any remedy in Law. Will my wife being a British citizen and a serving member of Her Majesty’s Armed Forces help?