They are not illegal - at least in Queensland. I enquired with TMR in October last year and this is their response:
Thank you for contacting the Department of Transport and Main Roads (TMR) about aftermarket oil separate/catch cans.
The Vehicle Safety Standards Branch of the Department of Infrastructure and Transport, in Canberra, administers the Motor Vehicle Standards Act that requires all vehicles, when first supplied to the market, comply with all applicable Australian Design Rules (ADRs). The ADRs set the minimum safety and emission standards for vehicles. However, Queensland legislation requires that vehicles continue to comply with the ADRs applicable when the vehicle was first supplied to the market in order for them to be registered.
This modification would not require certification or approval from TMR providing the oil separator/catch can does not increase the gas emissions beyond the requirements in the ADRs and does not vent to the atmosphere.
Please find attached link to ADR79/04
https://www.legislation.gov.au/Series/F2011L02016
I trust this information is of assistance.
Kind regards,
Peter
Vehicle Standards | Standards and Accreditation
Transport Regulation Branch | Department of Transport and Main Roads
Floor 9 | 61 Mary Street Brisbane 4000
PO Box 673 | Fortitude Valley Qld 4006
P: 13 23 80
E:
vehiclestandards@tmr.qld.gov.au
W:
www.tmr.qld.gov.au