The decision, handed down in the District Court on Monday, also found the man had a "reasonable defence" for a second comment which allegedly involved further offensive language.

The arrest, which took place in Sydney in July last year, occurred after police stopped 28-year-old student Filip Black while he was walking home from TAFE, dressed in a black hoodie "with the hood up".

Mr Black refused to answer police's repeated questioning about who he was and why he was in the area, the court heard.

He was arrested for offensive language after he eventually replied, "none of your f---ing business".

Yet soon after, one of the officers said "you're f---ing worked up", the court heard. The arrest was discontinued after Mr Black pointed out that the officer had used the same language.

Mr Black was detained by police for some time after, in which police subjected him to a search.

Judge Scotting ruled the arrest and subsequent search were unlawful, as police failed to consider alternative ways to deal with the matter other than arrest.

A second comment made after his release, in which Mr Black allegedly told police "f--- it in your mum's p----", was found to be reasonably excusable.

Judge Scotting found Mr Black was "entitled to be upset", given the "protracted and unjustified interference with [Mr Black's] civil liberties".

Solicitor Sophie Parker from Redfern Legal Centre said the decision represents "an important point on civil liberties".

"Police should not be making arrests for offensive language, particularly where that language is directed only at police," Ms Parker said.

"Arrest is a means of last resort, and when you are talking about something like offensive language, which is on the lowest end of the spectrum of criminal offences, then there are other mechanisms that are more appropriate."

Ms Parker hopes the case will deter police from making unnecessary arrests for offensive language, which frequently lead to a "trifecta" of charges including resist arrest and assault police.

"The way in which this situation quickly escalated is also a good example of how an unnecessary arrest for offensive language can lead to further more serious charges."