From the photos it does appear that the condensation funnel is not reaching the ground (at the time). Since the photos are taken from the top of a hill the funnel may look deceptively low. In any case, I think it's possible that some weak circulation reached the ground for a short period of time. Who knows? If it was the 20th, I do agree that the conditions did not appear favourable for tornadoes. When I first saw this thread I looked at the GFS winds/LI's and was suprised. I was expecting a strong shear/low CAPE environment. As can be seen on the Melbourne sounding, 500 mbar wind speed is only 30 knots. This would be fine in a higher CAPE/warm season storm but in a low CAPE/cool season setup I would typical expect far stronger mid-level winds, say 40+ knots. Lower-level winds are also relatively weak with only 20 and 10 knots at 850 and 900 mbar, respectively. I would be interested to hear John Allens opinions on this funnel/possible tornado. This should be right up his alley.