Mudguard Stays broken/disconnected

[Spiderweb]

Well spotted. That clip should go over the chainstay bridge. With its current fastening, it will allow significantly more twisting movement and (with the fulcrum of the seatstay bridge triangle clip) greater (than tolerance) lateral movement at the rear. Which may be the cause of the guard stays' failure and the increased rattling.
Has the chainstay bridge got a tapped thread? If so, use it.

It looks as though the main bit of the rear rack would hinder the stays if the mudguard was swivelled so it could be fixed to the chainstay bridge?

 

[Ajax Bay]

It looks as though the main bit of the rear rack would hinder the stays if the mudguard was swivelled so it could be fixed to the chainstay bridge?

Don't think so. The broken stay (goes for the one the other side too) should be parallel to the secured one and would still run below the bottom of the pannier(s) if they were full.
Securing the clip with a ziptie to allow that guard orientation would be a 'conspiracy' iyswim: more likely a cock-up.
But if the panniers been ridden around mostly empty, I can quite see them hanging low and bashing the upper stay (both sides): result = breakage.
So the issue (mitigation) may be (if only half load) run with only one pannier, but full.