removing old garden wall foundations

Sorry for the long post, not sure how much is relevant.

//www.diynot.com/network/jd1980/albums/3032

As can be seen in the picture, I am in the process of removing an old garden wall/building replacement. The picture shows the old brick wall removed and the retaining wall behind it. You may be able to make out fence posts exposed that were concreted in. Where they are and all the ivy is, marks the ground level for my neighbours house (its a hilly area). Their house is some distance from this point, I would estimate around 12 meters or so. I believe the brick wall was originally part of a garage that used to be where the fence was (even though the wall is on my property), as when I moved in the house the wall had no top stones but I have seen aerial photos of what used to be there.

From point 'B' there were large flags laid on soil that were slightly wider than where the gate is, but not all the way to the wall. Between the flags and the wall were pebbles, and they were obviously sloping upwards towards the wall where there were masses of random concrete and cement (there was yet another fence in front of the wall at some point). Since the brick wall was really badly finished I decided the plan was to remove and replace with concrete stone effect blocks and flag the entire area from house wall to garden wall.

Initially the idea was to remove the brick wall and build on top of the old foundation, filling the dug out soil with hardcore and laying flags on a solid base of mortar. At point 'C' the foundations are almost low enough to meet the hardcore, and then lay flags that meet the flags at point 'B' and are below the house DPC. At point 'A' it is obvious the foundation is too high. I started to cut away at it with an angle grinder, but now I also found the depth of it, it will be only 5cms deep in some points. Before realising the depth, I was going to fill in the areas that are a bit too narrow with some new concrete, but now I know that 5cm isn't deep enough at area 'A'.

So my thoughts now are just to remove all the old concrete foundations and build new ones all along. However, I'm unsure what effect the removal will have on the retaining wall and also what tools to use to best accomplish the job but minimise impact on the retaining wall?

Chip some of the showing foundation away and you might find it's not the foundation for the retaining wall but one for the brick wall laid in front of it. It seems very high to be the found of that retaining wall.
If it is then you need to underpin the existing foundation. Remove smaller sections, dig down deeper and concrete before moving on to next section.
Is that an air-con unit slap bang in the middle of the path? That's in the way a bit too isn't it?

I'm sure its foundations for the brick wall, but if I cut it away and leave the foundation (or aligning support) for the retaining wall no wider than the actual wall itself, then I'm breaking the 'rules' of wall foundations where they should be wider than the actual blocks that make up the wall - it may only be temporary but still.

I can acually see the foundations for the retaining wall appear to be higher than this one, its almost like they made like a step of some kind when bulding it. I have uploaded some new images.

green line is where I suspect the retaining wall foundations to be. Red is where I would supposedly vertically slice the brick wall foundation away.

So I see that you are saying rather than remove the whole stuff at once along the red line, just break it and do it in smaller areas, like the blue line shows?

Foundations diagram obviously not to scale, just my general perception.

The air con unit does not really get in the way of human traffic or severly hamper building, nor is that side of the house used much. In fact in 5 years i've only been down there to ponder over removing the wall that is now gone. The biggest problem is me hitting my head on it when excavating!