The company behind plans for a zip wire in Cardiff Bay has threatened legal action against a hotel, claiming it has breached a "binding contract" to allow it to use its roof.
St David's Hotel told local people it never agreed to host the zip line start point, in a letter seen by the BBC.
But City Zip said it had written permission from the hotel before it began selling advance tickets.
The hotel said it had decided not to progress with the plan.
City Zip told BBC Wales that it had worked closely with the hotel and had agreed on commercial payments, operating hours and concerns including noise reduction.
It said it had served the hotel, which is part of the Voco chain, "with legal papers".
"They requested a longer period to respond, which we granted," said City Zip chief executive Barry Shaverin.
City Zip has withdrawn its planning application but said it aimed to re-apply to Cardiff council. Council officials had previously recommended it for approval.
The company has already sold tickets for the Cardiff ride despite not having planning permission.
The attraction had been billed as offering a 350m zip line ride at speeds of up to 36mph (59kph) from the hotel to the Norwegian church, allowing customers "an exhilarating, unforgettable journey across Cardiff Bay's skyline".
It was due to start operating in 2019 but is now proposed for 2020 according to the company, which has operated a zip line for three summers in central London's Archbishop's Park.
What has St David's Hotel said?
A letter from St David's Hotel to local residents said City Zip's planning permission application "made several incorrect statements".
It added that terms and conditions for operating "have not been agreed and are unlikely to be agreed".
The letter said there had been no deal between the hotel and City Zip to build a cabin at the top of the hotel, a reception cabin on the grounds or to provide changing facilities.
TV screenwriters Russell T Davies and Andrew Davies, who have flats nearby, are among those to have objected to the development.
The company argued it had more support than objections from local people and businesses and had addressed concerns over privacy and potential social problems with a plan for a screen on the hotel roof.
However St David's Hotel said it had never and would never agree to this.
"We agreed to absolutely everything they requested, no matter the cost," Mr Shaverin said.
The hotel general manager Russell Durnell told BBC Wales: "Our position remains that our priority is to provide excellent service to guests of Voco St David's Cardiff. We reviewed the impact this initiative could have had on the hotel and the experience of our guests, and decided not to progress with it."
It is unclear from City Zip's most recent accounts how much has been raised from the sale of tickets for the Cardiff attraction.
However, its accounts show the company had £298,565 in overall liabilities in 2018 compared with assets of £98,155 the year before.
The accounts said it was "dependent on the support of its investors who have confirmed their intention to support the company".
As a result of this commitment, City Zip said it can remain operational.
City Zip has two outstanding charges - effectively mortgages - with B Capital Services (Malta) and Elmwood Capital.
These businesses would be first in line for repayment if City Zip ceased operating ahead of others owed money, including customers.
The successful operator of zip lines across north Wales, Zip World, was an early investor in City Zip and one of its co-founders was initially a director.
However, Zip World withdrew from the project in March 2018 and is no longer involved.