THE Melbourne City Council is challenging the power of magistrates to make offenders pay money to charities as part of their punishment, in a decision the non-profit sector fears will cost them millions of dollars.
The council has lodged an appeal in the Victorian Supreme Court concerning two questions of law, which charities fear will have a significant impact on them.
It is appealing a decision from 2011 when a magistrate required an individual who pleaded guilty to breaching the Food Act to donate $2500 to St Vincent De Paul's food van service.
It is common practice for magistrates to require offenders to make a payment to a charity when they release them without conviction.
At issue is whether a payment to a charity is considered a fine under the Sentencing Act.
Richard Niall SC, for the City of Melbourne, argued during the hearing on Wednesday that the council should receive the financial contribution, rather than a charity.
"The prosecuting authority should receive the benefits of the prosecution," he said.
Barrister Andrew Woods appeared in court acting for PilchConnect, a legal service for the non-profit sector.
PilchConnect is opposed to the council's action, saying the action is threatening payments to charities and potentially millions of dollars are at stake for the sector.
"Charities operate with limited resources to help communities and the disadvantaged. Where courts can help charities, we should be supporting them," PilchConnect director Juanita Pope said in a statement.
Justice John Dixon will hand down his judgment at a date to be fixed.
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