The Knights lodged their application last month in an attempt to recover more than $300,000 the A-League club allegedly owes them in rent for sub-leasing EnergyAustralia Stadium and other costs.

The Court was told yesterday morning that negotiations between the feuding codes had broken down and the Knights wanted to proceed with the legal action.

Solicitor and CEO for the Jets John Tsatsimas said the Football Federation had become involved and had contacted the Knights on Monday.

He said the Federation wanted a two week extension to resolve the dispute.

But Barrister Damien Allen, acting for the Knights, said that was not agreeable.

"There's an implied admission of insolvency," he said.

"They have had to go to the Football Federation cap in hand to repay their debts to the Newcastle Knights."

Mr Allen said there had been talks between the parties yesterday morning but they had "come to nought".

"My instructions are to proceed," he said.

Senior Deputy Registrar Andrew Musgrave said that yesterday marked the first occasion the case had appeared in the Supreme Court list and he would adjourn it for one week.

Outside court, Mr Tsatsimas rejected the notion there was an implied admission of insolvency on behalf of the Jets.

"The FFA provides an income stream which is similar to that received by the NRL clubs from their governing body," he said.

Knights chairman Rob Tew told The Herald that it was disappointing the parties had not been able to resolve the wrangle outside of court.

"We're still waiting to hear what the Football Federation is proposing," he said.

Jets owner Con Constantine said he felt betrayed by the Knights' decision to press ahead with legal action.

"I thought the situation could have been sorted out between us," he said.

"I donated a large sum of money in about 1998-99 and then 2001, from myself to the club to help them, to bail them out of a situation they could not get themselves out of, and for them to do this now is very disappointing."