Yes, that's what Ritters were saying.  They said that the fact that the barrier even offers the possibility to have passengers sitting behind it, with no means of escape makes it illegal - He did mention something about having a glass breaking hammer available might be a solution.
However,  The more I look at it the more it seams that Ritters are perpetuating a myth.
The Vic Roads allowed vehicle modification list that I found 
here,  makes no qualifications about the use of Cargo Barriers,  and even more importantly,  I checked with my Insurance company, and specifically asked the question whether a claim woule be denied on the basis of installing a cargo barrier in a 7 seater, and they said no.  Provided that I advise them of the installation of the cargo barrier - it will be covered.
So the summary seems to be:
[1] It is legal (in Vic) 
[2] Advise your insurance company 
[3] Don't bother asking Ritters to do it for you. 

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