The applicants of 5 Forestview Lane took Hepburn Shire Council to VCAT last month because it refused to grant a planning permit.

The council has refused the proposal on four grounds including: jeopardising the environmental qualities of the site; negative visual and physical impacts on the "special neighbourhood character" of the site; failing to meet ResCode

standards; and not addressing or meeting the design standards required to provide a safe and serviceable road layout.

Local resident Lorraine Nicholls of Table Hill called John Faine at ABC's 774 radio station before the VCAT hearing to let people know about the historic track.

"I've answered hundreds of calls since," she said.

Mrs Nicholls said the track would celebrate its 140th anniversary this year.

"It should be celebrated rather than decimated," she said.

"It's too good a tourist attraction and an important part of Australian history."

Mrs Nicholls said the applicants were looking at the subdivision the wrong way.

"Table Hill is historical. One million dollars is nothing if you want to ruin something to so many people," she said.

"It will destroy the atmosphere."

The state and federal governments put money into the track which opened in 1988.

Three boys, William Graham, 7, his brother Thomas, 4, and Alfred Burman, 5, were last seen from their homes in Connell's gully on June 30, 1867.

They reportedly went in search of wild goats.

The remains of the boys were found in a large hollow tree.

The Graham Dux award is presented at the Daylesford Primary School in recognition of the town's effort in the search.

VCAT has asked the council to re-submit its refusal with different conditions.