The council failed to decide after 60 days on whether the land known by locals as the William Dunstan Reserve and residentially zoned could be subdivided.

Acting on behalf of Steve Grovac, Beveridge Williams and Co has filed forms with VCAT indicating the challenge.

In a statement, City of Ballarat general manager of city strategy Natalie Reiter said opposition to the subdivision had slowed the council's decision.

"More than 60 objections to the planning application were received and a mediation meeting held to discuss objectors' concerns," she said.

"This, in combination with the necessarily thorough process to examine the heritage status of the land, has unfortunately lengthened the time required for the assessment of the application."

Mr Grovac bought the 1.2-hectare block of land in a conditional sale from Sovereign Hill, depending on whether the subdivision is approved.

A notification was sent to the Friends of William Dunstan Reserve group, members of which said they were meeting to discuss their taking part in the action.

President Peter Wills said he had been in contact with the central ward councillors about the failing, which he termed "bizarre".

"They didn't know what was going on either," he said.

The council has until November 6 to submit a statement of grounds to VCAT with its position on the application.

Mr Wills said the group would continue its fight to put the land into public hands.

The oval was part of Golden Point Primary School, but was bought by Sovereign Hill to use as overflow parking in 1997. The title was changed in 2012, when Sovereign Hill paid to remove the clause blocking development.

The council previously said it could use a planning law to take five per cent of the land for green space, but the Magpie Street group was not agreeable with the offer.

Mr Grovac declined to comment.

alex.hamer@fairfaxmedia.com.au