Alexander Csergo says allegations against him contain "numerous exaggerations" as he remains in custody accused of reckless foreign interference after a court denied him bail for a third time.
His mother says he is a businessman and was arrested after returning to Australia to care for her.
The 55-year-old was charged in April with an offence prosecutors are attempting to prove for the first time.
"This is a new offence … and the court is dealing with something new," Csergo's barrister Bernard Collaery told reporters, leaving Sydney's Downing Centre Local Court on Friday.
He said another application will be made for bail in the Supreme Court.
Court documents allege that in Shanghai, NSW and elsewhere, Csergo engaged in covert or deceptive conduct, in collaboration with, funded, directed or on behalf of two foreigners named "Ken" and "Evelyn".
He allegedly provided handwritten reports to the pair, who claimed to be from a think tank.
Mr Collaery told the court Csergo used open source information and co-operated as harmlessly as possible out of fear while China remained in lockdown due to COVID-19.
"This man was determined not to be detained in China," Mr Collaery said as he attempted to secure Csergo's release on bail.
"He was co-operating to keep his nose clean."
Csergo is accused of being reckless as to whether his actions would support foreign intelligence activities.
He appeared in court on-screen from custody, and disputed parts of a written record of an interview with authorities.
One location, empty due to the COVID-19 lockdown, became multiple locations when Australian Federal Police wrote it up, Csergo said.
"The statement I gave was redacted … they redacted it to make it appear covert," he said on Friday afternoon.
"To extend that into a narrative around multiple locations is an exaggeration at the minimum."
"There are numerous exaggerations here, numerous," Csergo said.
Magistrate Susan Horan said she understood his position but that the case against him could not be called weak.
"He also needs to understand the court takes the statement of facts at its highest on a bail application," she said, denying bail on Friday afternoon.
The magistrate heard Csergo's third application for bail after being satisfied circumstances had changed since his last bid in June, with the charge against him not certified within a six-month period following his arrest.
Denying bail, she said the most significant risk was that Csergo would not return to court, despite $300,000 in surety offered from himself and family members.
There was material before the court alleging Csergo maintained contact with "Ken" after returning to Australia and the magistrate found it somewhat curious he had allegedly conducted web searches about eligibility for passports in other nationalities.
Mr Collaery said Csergo is not a dual citizen and had not applied for another passport.
Ms Horan said she accepted Csergo had familial ties to Australia, but said there were also significant ties to China, heightening the risk he may not appear.
She also noted alleged links to Chinese government officials who could likely assist him in not appearing.
The prosecution is awaiting the consent of the federal attorney-general's office to proceed to charge certification, expected in late November.
Catherine Csergo said her son is innocent and the delays in his case are "absolutely disgusting".
"My son is not a spy, he's a businessman," she told reporters outside court before her son was denied bail.
He came back to Australia to care for her, she said.
"I don't sleep, I can't eat, I'm stressed out."
Csergo returns to court on November 29.
