Colac Otway Shire councillor Chris Smith met with the man at lunchtime on Tuesday at a private address on the western outskirts of Colac before the man walked away and soon after returned with the speargun.

He fired the speargun towards the councillor, who blocked the arrow headed towards him with a leather folder.

The man then tried to strike the councillor with the speargun.

The councillor  jumped in his car and drove off.

The offender then stepped near the path of the car and smashed the windscreen with a hammer.

Police located the man's body in a nearby town on Wednesday afternoon.

It has been reported that Cr Smith said he was devastated for the man's family.

The incident prompted the council to close two of its three offices on Tuesday.

The pair had met to discuss a shire matter.

The deceased man had business links with Colac.

Anyone considering self-harm is urged to contact Lifeline on 13 11 14.