Rusty Jazz Wheel Arches

[grahamsmithbsc]

I have recently bought a 2006 Jazz SE. I had a look underneath before buying and it looked OK ish.
I have now discovered rust around the lips and inside of the rear wheel arches on the inner skin. The original sealant has broken and allowed water to get behind, penetrating and rusting the steel (Honda, why no plastic inserts).
Took it to my local dealer in Crawley and told it's bodywork rust and not covered by the 12 year warranty even though its on the secondary skin in the wheel arch. Is this correct?