The ACT Director of Public Prosecutions' office had tried to use the car's connection to the crime as grounds for seizing it under laws for the confiscation of criminal assets.

But a magistrate rejected their arguments, which she said were in part based on speculation and not evidence, and on Tuesday found in the teenager's favour. She ordered the DPP to pay his costs.

Speaking after the ruling, the teenager's lawyer said the laws were designed to target career criminals, not members of the public guilty of one offence.

The teenager, who cannot legally be named, was 17 when he struck up a sexual relationship with a 13-year-old girl he had known for more than a year.

The pair - who had confessed to their liking each other as more than friends - met in his car several times after she finished school and were sexually intimate.

The first-time offender pleaded guilty to act of indecency charges on a child under 16 and was sentenced in the ACT Supreme Court last year to community service and a good behaviour order.

But in May prosecutors applied for and were granted a restraining order against the teenager's car on the basis of its role in his crimes.

The operation of ACT's confiscation of criminal assets laws mean that the car would be automatically forfeited to the territory unless the teenager applied for its exclusion and proved it was not "tainted" property.

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The teenager, represented in court by lawyer Michael Kukulies-Smith, argued that the only connection between the crimes and the car was that it was where they had happened.

But prosecutors said the teenager had used the car to his advantage in the crime, including using the car as a strategic meet-up point that facilitated the pair meeting privately after school.

Magistrate Beth Campbell was not persuaded by the prosecution arguments, saying some relied on speculation and were not supported by evidence, and found in favour of the teenager.

She ordered the car be excluded from seizure by the territory. She also ordered the Director of Public Prosecutions to pay the teenager's costs.

After the decision Mr Kukulies-Smith said the car should never have been pursued.

“The legislation and powers [the law] confers would be better focused upon organised crime, not individuals caught in one-off offences that don’t result in any financial advantage," he said.

Mr Kukulies-Smith said it was unfortunate the matter could not be resolved without costly litigation.

"As the magistrate ultimately found, the DPP’s position was not supported by the evidence.

“The car in this case was not used as a instrument of the crime, nor was it used in any particular way to assist or further the crime," he said.

"The car just happened to be the venue, this has never been enough to justify seizure; the DPP’s specialist team ought to have realised that."

Before delivering her reasons in the ACT Magistrates Court on Tuesday, in relation to a separate prosecution application to restrain another offender's property, Ms Campbell said:

"It's somewhat draconian legislation and it's not very difficult for that threshold to be reached.

"These applications are not that easy to oppose."