An orphaned young woman who sought to withdraw her inherited investment from financial giant Sanlam Life Insurance Limited to cover tuition fees now finds herself facing a legal bill instead.
This week, the Mbombela Division of the Mpumalanga High Court ruled in favour of Sanlam, defeating a claim by Nosifiso Chigombo, who had received a windfall following her mother’s passing.
The case became a modern-day David versus Goliath struggle, but with a twist — the giant prevailed.
Chigombo battled against the corporate powerhouse but ultimately faced not only a legal defeat but also the costs of the appeal and the initial court case.
She inherited R320 000 after her mother’s death and invested the sum in Sanlam’s cumulus fixed return policy in December 2021.
Maturity benefit
According to the court, Chigombo had followed what she believed to be sound financial advice.
The policy, designed to run for five years, promised a maturity benefit of R418 368 by January 2027.
However, just three weeks after signing the contract, Chigombo applied for a partial withdrawal of R120 000, which Sanlam granted.
The trouble started in January 2023, when Chigombo requested another withdrawal, this time citing the need to pay for tuition fees.
Sanlam refused, prompting her to demand the cancellation of the contract and the return of the remaining investment.
The Nelspruit regional court initially ruled in her favour, ordering Sanlam to pay her R167 000. However, the insurance giant appealed the decision and won the case.
Financial advice
In his judgment, Acting Deputy Judge President Takalani Ratshibvumo acknowledged Chigombo’s difficult circumstances but upheld the legal framework that favoured Sanlam.
He highlighted the importance of financial advice tailored to individual circumstances.
“It is often said that the best economical thing to do when one has a windfall of cash is to invest it,” said Ratshibvumo.
“While this could be true for most people, those who have been in the financial sector long enough know that the best financial advice is the one tailored according to [an] individual’s needs.”
Ratshibvumo further commented on the breach of the contract, saying the investment was to run for five years, from January 1, 2022, until January 1, 2027.
“This soon became a dream far-fetched when, on 20 January 2022, three weeks from the date of the contract, the respondent applied for a partial withdrawal of R120 000 from this investment,” the judge said.
Despite Chigombo’s appeal for leniency, the judge ruled that her actions directly violated the terms of the contract.
Integrity of investment policies
“In allowing the respondent to make a second withdrawal or cancel the contract after making a partial withdrawal, the appellant would not only be deviating from the agreement but would also be breaking the law.”
Sanlam argued that allowing a second withdrawal would have undermined the integrity of long-term investment policies designed to protect both parties.
The high court agreed, with Ratshibvumo criticising the lower court’s decision.
“The court a quo reasoned that ‘a party may enter into a contract, but if for whatever reason they want to cancel the contract, it is in terms of the law allowed,’ but this was not supported by the contractual document nor the applicable legal framework.”
With the high court ruling in Sanlam’s favour, Chigombo has not only been denied access to her remaining investment funds but is also required to cover the legal costs of both the appeal and the initial case.
“There is no reason why costs should not follow the outcome. The appeal is upheld with costs,” Ratshibvumo ruled.
