The legal stoush played out in the NSW Land and Environment Court on Thursday, where Marvan Hotels Pty Ltd, headed by well-known Sydney publican Marcus Levy who owns and operates Hotel Delany, has lodged a court appeal to remain open until 2am, six nights a week.

At the hearing, barrister Geoff Farland for Newcastle council argued the appeal should be refused on the basis that it is "out of character" and "incompatible" with the area.

"This is not a low-impact venue by any stretch of the imagination, it is simply wrong to suggest that it is, definition or not," he said.

"It's such an easy thing to say, 'It's only 12 months, so you should allow it to happen', that does not mean one is entitled to ignore present known facts and consequences.

"There are a plethora of objections and complaints, they are known, and to put the neighbourhood through a trial period in that context, the council says is entirely inappropriate."

A new plan of management for the popular pub was made public after Marvan Hotels lodged its appeal to the NSW Land and Environment Court to keep it open until 2am six nights a week, and until midnight on Sundays.

The current closure time is 10pm Sundays and midnight the rest of the week.

The venue had applied to City of Newcastle to stay open until 2am, but the council instead allowed 1am closure on a 12 month trial basis.

Mr Farland argued the plan of management put forward by Marvan Hotels is too complex and "quite unworkable".

On Fridays and Saturdays, the top floor, Darby Street beer garden and door to the council car park would close at midnight, and capacity would be reduced from 990 to 300. The public bar would close at 1am, and capacity reduced to 120, including a maximum of 80 people in the gaming room.

The plan said head counts would be undertaken at 11pm, 11.45pm, 12.30am and 12.45am, after which mechanical or electronic counters would be used to maintain an accurate patron total.

If there are more than 300 people in the venue at 11pm, entry would be restricted, and if there are still more than 300 people inside at midnight, patrons leaving the top floor would be directed to exit the venue.

If there are more than 120 people inside at 12.45am, patrons in the public bar will be directed to leave.

From Monday to Thursday, the public bar would also close at midnight and the capacity reduced to 120.

Barrister for Marvan Hotels, Jacinta Reid, argued the community would benefit from $1.5 million in acoustic works her client has committed to should a 12-month trial go ahead.

"My client cannot commence the trial period until those capital works are completed, and those capital works will have an advantage to the community in terms of acoustic impacts after midnight," she said.

"Even if it could not satisfy the council or court on the next occasion that it had achieved what was required to be achieved in the trial period."

Ms Reid said there was no good reason why the pub could not, or would not be well-managed in the trial period, and pointed out that at the end of the trial, another application would have to be made to making the new trading hours permanent.

"That 12-month period is an opportunity, and it may be a one-time opportunity for my client to show to the council and community these hours are acceptable," she said.

"This applicant would be afforded an opportunity to demonstrate it can operate within those parameters."

Acting Commissioner Nicola Targett reserved her judgement for a future date, which is yet to be set.