The charity was appearing before Mr Justice Sales at the tribunal on Wednesday in its fourth appeal against a ruling preventing the charity from changing its objects in order to stop gay couples from using its adoption service.
Monica Carss-Frisk QC, for the charity, said that the tribunal had been wrong in deciding last year that the negative impact of preventing gay couples adopting through the charity outweighed the needs of children seeking adoption.
The Charity Commission has twice decided that the charity cannot change its objects to limit its adoption service to heterosexual couples, a decision that was upheld by the charity tribunal in April last year.
Lawyers for the charity say discrimination on the grounds of sexuality would be lawful under section 193 of the Equality Act 2010, which allows discrimination provided it is a "proportionate means of achieving a legitimate aim".
Catholic Care has maintained that unless it is able to exclude gay people from using its adoption service it would lose church funding and be forced to close the service.
Carss-Frisk told the tribunal: "If you bear in mind how paramount the interests of children are then really the only possible conclusion under section 193 is that what we seek to do is a proportionate way of achieving a legitimate aim."
She said that the tribunal’s ruling that preventing gay people from using the adoption service would limit the pool of potential adopters was also flawed.
Catholic Care was noted for its ability to find homes for hard-to-place children, she said, and allowing gay couples to adopt would mean a loss in funding that would result in the charity’s closure.
"If the charity can’t get funding and has to stop providing its service, even fewer – in fact no – parents would be passed by the charity," she said. "The tribunal fails to take this into account."
Lawyers for the Charity Commission will present their case to the Upper Tribunal today.