Developers New Home Shop Pty Ltd took Ballarat City Council to VCAT after the council refused to grant a permit for the proposed subdivision, which covers about five acres on 43 Haymes Road, Mount Clear.

Seven objectors to the proposal, including the Friends of Canadian Corridor, attended the seven-day VCAT hearing to make submissions about the lot.

Objectors included nearby residents and local landowners, situated next to the proposed subdivision.

The proposal would have seen the land broken into 24 residential lots, ranging in size from 802 sqm to 1825 sqm.

The land itself sits beside the Woowookarung Regional Park, and public lands which form the Buninyong Trail - or 'bunny trail', bounding the east of the site.

Beyond self-seeded pines from the nearby pine plantation, the area contains extensive native vegetation, as noted by VCAT senior member Alison Glynn, and is covered by native vegetation environmental provisions and overlays.

New Home Shop took issue with the council's claim that its proposal did not address such overlays, and native vegetation protections for the Canadian forest area.

The council also refused the permit on the basis that the subdivision would result in an "unreasonable loss and degradation of native vegetation" in an identified area of koala habitat.

In her findings, Ms Glynn set out the various controls covering the site - which include a Neighbourhood Residential Zone 1 overlay, the Canadian Valley Outline Development Plan 2005, and native vegetation provisions in the state planning scheme.

One issue Ms Glynn discussed in her findings was the road layout of the proposed subdivision, which would see a road built adjacent to a public reserve.

"We are not satisfied that the issues of how the reserves, including the road reserve profile can be left to be addressed by permit conditions.

"A landscape concept plan that considers the contours of the land, particularly where it interfaces adjoining public land is required.

"We find this is not a matter that can be left to a condition on the permit given the need to consider how the road and its carriageway will, or will not, be exposed to the reserve and the impact on existing and proposed vegetation in the road reserve and adjoining existing public reserves, along with fire management issues that we address further below."

Developers planned to form a new public reserve at the north-east of the land as part of the subdivision, which would act as both a site for koala habitat and a bushfire management zone.

However the City of Ballarat took issue with the plan, as the land would be handed over to the council to manage as a public reserve, a burden the council objected to.

In her findings Ms Glynn also discussed the potential management of the land as part of the Woowookarung Regional Park - under the management of Friends of Canadian Creek, or through the Department of Energy, Environment, and Climate Action.

No one, however, was willing to take on the land parcel, which would have had to be pruned back as part of a fire-break zone.

Member Glynn affirmed the council's decision to refuse the permit.

"With the matter now with us as the Tribunal to review the decision of the responsible authority to refuse to grant a planning permit, it is not for us to project manage the existing proposal that we find unacceptable, in order to make it acceptable," Ms Glynn said.

"There are too many matters that require resolution to the extent that we find a new proposal is required. For the reasons given above, the decision of the responsible authority is affirmed. No permit is granted."

Friends of Canadian Corridor president Jeff Rootes said the group were thankful for the council's efforts in refusing the application at VCAT.

"We are very pleased with the outcome, it shows that the Ballarat planning schemes protection for koala habitat is actually working," Mr Rootes said

"It is a good outcome for the corridor and the biodiversity in it."

The Buninyong Trail, which neighboured the proposed subdivision, was a project completed by the Friends of Canadian Corridor, who built a pedestrian path over the former Ballarat to Buninyong rail line.

Around the site, the Friends of Canadian Corridor have been removing exotic pine in the area and encouraging the growth of native trees and grasses.