On 23 July Lieutenant Colonel William Owen, commander of the 39th Battalion was flown to Kokoda to take command of B Company in put in place their defence.

After Captain Templeton disappeared at Oivi, Major Watson of the PIB (Papuan Infantry Battalion) took command of the troops.

The track to Kokoda was now cut off; Lance Corporal Sanopa of the PIB led the Australian and PIB, under the cover of darkness, to Deniki. At Deniki, the men joined up with Lieutenant Colonel Owen and the remaining men of B Company who had made the decision to withdrawal from Kokoda prior to being cut off.

On 27 July, Lieutenant Colonel Owen with B Company and a few troops of the PIB decided to return to the currently unoccupied Kokoda village and attempt a defence of the Kokoda airstrip and adjoining plateau. They had left approx. forty troops at Deniki, and took the remaining men and redeployed to Kokoda by lunch on 28 July.

Lieutenant Colonel Owen then made contact with Moresby by radio to request reinforcements. Not long afterward, two Douglas transport planes arrived, they were carrying reinforcements from the 39th Battalion; however, after circling the airfield, they eventually returned to Port Moresby without landing as they had thought the Japanese were had captured Kokoda.

At 2 am on 29 July, the Japanese launched an assault on the Kokoda airfield hammering machine gun and mortar fire on the Australian positions before launching an attack. Close quarters hand to hand combat ensued.

During this battle Lieutenant Colonel Owen’s leadership was exceptional, his effective command and influence ensured the small force withheld enormous attacks and repelled many assaults during the night. Whilst in a forward dug-out with grenade and rifle in hand, leading by example, Lieutenant Colonel Owen sustained a serious wound, a bullet to the head , his brain exposed and fading in and out of consciousness, Major Watson once again took command of the force.

Approaching dawn with ammunition almost spent and only after their position was being threatened to be overrun did Major Watson give orders to his troops to withdraw to Deniki. 

Although the Australians were poorly trained, outnumbered at this stage and under-resourced, the resistance was such that, according to captured documents, the Japanese believed they had defeated a force more than 1,200 strong when, in fact, they were facing only 77 Australian troops.

The Kokoda airstrip and plateau were captured by the Japanese and having achieved their objective but with suffering considerable casualties and losses did not pursue the Australians. With the strategically imperative supply base and airstrip at Kokoda within Japanese hands full-scale overland assault against Port Moresby seemed a practicality and success seemed imminent.