Dampness can occur for a variety of reasons including rising damp, penetrating damp, salt contamination, service pipe leaks and condensation.
Rising damp is caused by moisture from the ground rising up through a structure by means of capillary action. This will occur where there is a failure or lack of a damp proof course (DPC). Rising damp will inevitably lead to spoiled decorations, defective plaster, rot in timbers and can create an unhealthy environment in which to live.
Here the rising damp has evidently been caused by differing ground/floor levels. There is a step down from the kitchen into the lower utility room. The wall plaster has been taken down to ground level, bridging the line of the DPC. If it is chopped away the wall may dry out. If not, specialist treatment in the form of chemical injection will probably be needed.
Related replastering and redecoration must be anticipated. You should employ a competent specialist damp proofing contractor who will give you a comprehensive insurance backed guarantee.