So as director you have to decide was the explanation of 2♣ by West a Misexplaination or was 2♣ a misbid. Clearly from West point of view, he accurately described what he thought he was playing as indicated by their CC. But while he "thought" they had agreed to play Michaels, they had no factual agreement what a cue-bid meant (we ask people to alert the meaning of their bid, not simply name the convention, so does this mean just having the same marking on the convention card confirms they have an "Agreement",)
For what it is worth, the person reporting this hand to me, got an "official" answer to this situation from Greg Vance, who is a Tournament Director and Rulings Box Associate at the ACBL headquarters. I could share his interpretation, but my friend totally disagrees with his opinion, so I thought I would poll people to see what others think.