A legal team representing the NSW State Government says the closure of two train stations at Newcastle does not technically mean the whole rail line has been closed.

Last year, the Supreme Court ruled the State Government needed to pass an act of Parliament to cut Newcastle's rail line at Wickham.

The Government is appealing that decision, while community action group Save Our Rail is appealing another part of the ruling.

The two train stations, Civic and Newcastle, have been shut since December 2014, and the State Government has covered the rail line with sealed roadways and pedestrian crossings in several places.

A barrister representing the Government told the NSW Court of Appeal on Wednesday the station closures and construction did not technically constitute the "closure" of the rail line.

Justice Anthony Meagher quickly replied that viewpoint "depends if you're looking at this from the perspective of someone in Newcastle".

Before last year's historic Supreme Court ruling, the Government's complicated long-term plan was to circumvent the need for an act of Parliament by transferring ownership of the railway's overhead wiring and boom gates to the Hunter Development Corporation (HDC) for $10.

HDC would then take ownership of the land, using its powers under compulsory acquisition laws.

Precedent could leave rail corridors with 'no protection'

Save Our Rail vice-president Kim Cross said the outcome of this appeal could have statewide ramifications.

"If the HDC is able to acquire the rail corridor in Newcastle, it could acquire the rail corridor in places including Bathurst, Lithgow — any place, any railway in the state," she said.

"There would be no protection in terms of the necessity to require an act of legislation."

The group's president, Joan Dawson, said the case was also relevant for projects involving compulsory acquisition, such as Sydney's Westconnex.

"Sydney itself is going through some of these problems with acquisition of public spaces for private development," she said.

"As you would all be aware, there are several instances here with the Westconnex causing a lot of angst out in the inner-western suburbs, such as Newtown.

"It can happen all over NSW. This is a statewide issue, it's not just an issue for Newcastle."

The hearing continues.