A quick check of the on-line mapping tool available from Lands Victoria (http://services.land.vic.gov.au/maps/interactive.jsp) shows that the railway reserve between Caulfield and Oakleigh is mostly about 20 metres wide. I'd be willing to bet money that it is actually 20.12 metres - which is exactly 66 feet wide in the old money. Why? Because 66 feet is 1 chain, a nice round number for the surveyors. It's wider south of Hughesdale.
Then a quick check of the VRIOGS standards shows that the absolute minimum width of a four track line that carries freight is 23.25 metres. This is made up of 5.75 metres between the centre line of each track (minimum when the tracks carry freight), and 3 metres outside the tracks. To this you'd need to add at least 1 metre on each side for the retaining walls.
So the railway reserve between Caulfield and Hughesdale is at least 5 metres too narrow for four tracks. Note that this is the absolute minimum. You need more room if you need to accommodate curves in the cutting, or if you want to put signals or o/h stanchions between the two pairs of tracks.
Not surprising that they quickly changed their mind and decided that three tracks was sufficient. This would *just* fit.