HIGH COURT RULING CLARIFIES DISCLOSURE OBLIGATIONS UNDER SECTION 7 OF THE MATRIMONIAL PROPERTY ACT

Introduction

A recent High Court judgment, DM v DM (2021/043212) [2025] ZAGPJHC 31 (28 January 2025) (“DM V DM”) has provided important judicial guidance on the obligations of spouses to disclose financial particulars under Section 7 of the Matrimonial Property Act 88 of 1984 (MPA). The case addresses the legal question of: when can a spouse be compelled to disclose financial information before the dissolution of a marriage? The ruling is significant for legal practitioners in family law, as it clarifies the discretion courts have in compelling disclosure and reinforces the principle of full and frank financial transparency in divorce proceedings.

Background of the Case

The case involves a protracted and contentious divorce action between the Applicant and the Respondent. The key issue before the Court was whether the Respondent could be compelled to provide full financial disclosure in response to a Section 7 Notice issued by the Applicant. The Respondent opposed the application on two main grounds:

1. that disclosure was premature because a pending separation application under Rule 33(4) sought to determine whether certain assets held by trusts and companies should be included in his estate; and

2. that the Section 7 Notice improperly sought disclosure of assets beyond what the law requires, including those held by third party entities.

The Legal Question: Is Compliance with Section 7 Mandatory Upon Request?

Section 7 of the MPA states that when it is necessary to determine the accrual of a spouse’s estate, that spouse must provide full particulars upon request, however, the legislation does not expressly define when such a request becomes “necessary”. The Applicant argued that disclosure should be automatic upon request, while the Respondent contended that the Court had discretion to determine whether disclosure was necessary at a particular stage of the proceedings.

While it had been established that financial disclosure could be required during divorce proceedings rather than afterward, no decisions had directly considered the timing of such disclosure or a courts’ discretion to manage it.

The Court’s Ruling and Key Findings

The Court held that it retains discretion to determine whether to compel disclosure under Section 7 of the MPA. While recognising the fundamental importance of financial transparency in divorce proceedings, the judgment set out key principles: 

1. judicial discretion exists: the Court found that it is not an absolute right for a spouse to demand disclosure at any stage. Courts must assess whether compelling compliance is “necessary” within the context of the case, considering factors such as potential prejudice, procedural fairness, and the timing of disclosure;

2. default position favours disclosure: the Court reaffirmed the principle that spouses have a heightened duty of financial transparency. The Court emphasised that disclosure should generally be granted unless there are compelling reasons to refuse it, such as abuse of process or premature timing;

3. the pending separation application did not preclude disclosure: the Respondent’s argument that the separation application should be resolved first was rejected. The Court held that since the law already recognises beneficial ownership as part of a spouse’s estate, the pending application did not justify withholding disclosure;

4. assets held by trusts and third parties must be disclosed if beneficial ownership exists: the Court clarified that Section 7 of the MPA requires a spouse to disclose assets held in their name or those over which they exercise beneficial control. The Respondent’s argument that disclosure was improperly extended to third parties was dismissed; and

5. courts must prevent “catch me if you can” strategies: the judgment warned against delay tactics that hinder financial transparency. The judgment reaffirmed the courts’ role in preventing non-disclosure and asset concealment in divorce litigation.

Conclusion and Practical Implications

The ruling in DM v DM is an important precedent reinforcing full and frank disclosure in divorce matters governed by the accrual system. While courts retain discretion in determining when compliance is necessary, the judgment makes it clear that disclosure will generally be required unless exceptional circumstances justify refusal.

For family law practitioners, this case underscores the importance of:

1. ensuring clients comply with financial disclosure obligations to avoid adverse Court Orders;

2. understanding that beneficial ownership principles apply to the accrual system and cannot be circumvented through trusts or corporate structures; and

3. recognising that while courts retain discretion, they are unlikely to tolerate attempts to delay or avoid financial transparency.

The judgement provides valuable guidance to legal practitioners and divorcing parties on handling complex financial disclosure. The Court’s Order also serves as a practical precedent, allowing 20 days to comply with Section 7 Notices - double the 10 days initially requested - underscoring the need for sufficient time to ensure thorough disclosure.

Family law practitioners should also take note of the Court’s approach to costs in Section 7 applications. Notwithstanding mutual allegations of procedural abuse, the Court awarded costs on the standard Scale A for party and party costs. This suggests that punitive costs orders should not be readily imposed in such matters solely due to the contentious nature of divorce proceedings.

This judgment serves as a crucial reminder that honesty and full disclosure are the cornerstones of a fair and equitable divorce process.

Written by Jade Baldwin

We trust that you found this article informative, please email info@hjwattorneys.co.za for assistance with all your Litigious related queries.

This article is provided for informational purposes only and should not be substituted for legal advice on any specific matter. Any opinions expressed herein are subject to the law as at the time of writing and will change in accordance with any change in the law. We recommend that you contact HJW Attorneys at info@hjwattorneys.co.za directly for advice applicable to your specific matter.