The New South Wales Land and Environment Court has heard a landmark appeal that could set a precedent for restricting mining companies' access rights over individual properties.

Five families from the NSW Southern Highlands have appealed against a November decision by the court that allowed Hume Coal prospecting rights over their properties.

In August last year, the Southern Highlands Coal Action Group (SHCAG) challenged a NSW Government decision to allow the Korean-owned company Hume Coal to drill exploratory boreholes in the Sutton Forest region.

Representing the landowners in their appeal was Bret Walker SC, who in 2014 completed a review for the NSW Government on the land access arbitration process under the Mining Act.

Mr Walker was scathing of the court's decision, saying Commissioner Susan Dixon made errors interpreting the law and described her reading of the statute at one point as "absurd and preposterous".

At the heart of the appeal is Section 31 of the NSW Mining Act, which states the holder of an exploration licence may not exercise any of their rights without the consent of the owner, if there is a "significant improvement" within a prescribed distance of the proposed exploration site.

According to Mr Walker a "significant improvement" should include not just homes, dams, and other structures, but improved pastures and crops.

In November, Commissioner Dixon found that an irrigation system on one of the properties did not count as a "significant improvement" under the Act because it was not on the surface of the land.

Mr Walker told the court that by the same logic you could suggest trees were not a part of the surface of the land because their roots were in the ground.

Hume Coal's barrister Richard Beasley told the court the landowners were trying to stretch the meaning of the Act and allowing improvements to pastures and crops would leave the mining companies with nowhere to go.

Chief Judge of the Land and Environment Court Brian Preston has heard submissions from both sides and is considering his judgment.