Case Comment: Michaud v. Grand Falls Golf Club (1990) 50 CCLI 264 (NBCA)

Published July 2, 2004

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Why this decision may interest you

The chances of making a hole-in-one are slim enough without additional vague rules! This amusing case reminds us to know the rules of the game, to follow the rules, and to carefully read the details of an insurance policy before heading into the fray.

Summary of Facts

The Grand Falls Golf club hosted the Alpine Potato Fest Golf Tournament every year on Canada Day. This 18-hole tournament was played on the Club's 9-hole course using a shot-gun start. This involves players going to different, pre-assigned holes and starting simultaneously, instead of starting one foursome at a time at the first hole.

As is common with 9-hole courses, each hole on the course had a single flag stick marked with two numbers (1/10, 2/11, 3/12 etc.) and two tee boxes, one marked yellow and numbered 1 through 9 and one marked black and numbers 10 through 18.

For the 1986 tournament, two tournament sponsors put up a fancy sports car, to be won by the first competitor to shoot a hole-in-one on the #2 hole. One of the sponsors provided the car (worth $18,000) and the other sponsor arranged for hole-in-one insurance to cover the cost of the car, less a deductible, in the event someone did shoot a hole-in-one. The sponsors split the cost of the insurance premium, which was $655.

The conditions attached to this hole-in-one insurance included a minimum yardage of 125 yards on the hole; two witnesses at the hole consisting of the golf pro, the assistant golf pro, the sponsors' representatives, or any other persons under oath; and completed and signed scorecards, among other conditions.

The plaintiff Michaud entered the tournament and started play on the third hole. His first time through hole #2 (which would have been his 9^th hole played) he took a bogey. His second time through hole #2 (which would have been his 18^th hole played) he shot a hole-in-one. When he went to claim his sports car, he was told his hole-in-one had occurred on hole #11, not hole #2 and he was given a dozen golf balls instead.

Michaud sued the Golf Club as well as the sponsors of the hole-in-one prize for breach of contract. At the trial, Michaud's case against the Golf Club was dismissed because the terms of the contest were not ambiguous and it was clear that a "hole-in-one on hole #2" could only be made from the tee box bearing the number 2, not the number 11.

Michaud appealed this ruling to the Court of Appeal, arguing that the rules of the contest were ambiguous and that such ambiguity should rule in his favour. Furthermore, the hole-on-contest should be governed by the rules of the Royal Canadian Golf Association (RCGA), which favoured Michaud's interpretation of the rules over the Golf Club's interpretation.

Issue

What were the rules governing the golf tournament, and specifically, the hole-in-one contest? If the rules of the contest were ambiguous, how should such ambiguity be resolved?

Decision

The court examined RCGA rules and heard testimony from RCGA officials. The court concluded that such rules required that holes be played "in their correct sequence" unless otherwise authorized by the tournament committee. Furthermore, the tournament committee was obliged to ensure that any local changes to the rules governing sequence of play must be made known to the tournament contestants.

In this case, the only change to RCGA rules that was brought to contestants' attention was the shot-gun start, which had Michaud starting his round on the third hole. In these circumstances, the last hole played by the plaintiff, and the hole on which he scored his hole-in-one was, under RCGA rules and in the absence of any notice to the contrary given to contestants, the second hole of the tournament. Whether Michaud shot from the tee box marked #2 or the tee box marked #11 was immaterial, as both were the second hole under RCGA rules and both were the same length.

The court ordered the Golf Club to pay Michaud the value of the sports car plus interest at 12 percent from the date of the tournament to the date of the court decision, as well as the plaintiff's legal costs.

Coincidentally, the golf club had to pay these costs out of their own funds as the insurance company refused to honour the policy on the hole-in-one contest, as conditions of the insurance policy had not been met. Specifically, the hole was 122 yards long and thus under the minimum length allowed (125 yards). As well, there were no proper witnesses.

Comments

Hole-on-one contests backed up by insurance are as common as dimples on golf balls. In this case, no one bothered to think through and confirm the local rules that would govern the contest, even though the tournament was being played in an uncommon format. These tournament organizers found, to their dismay, that tournament rules are what's written in the rule books, not what's in the minds of the tournament planners, in the collective memory of the golf club, or in the eyes of an average tournament participant.

Virtually all insurance policies contain conditions that must be satisfied in order for insurance coverage to remain in effect. Conditions might include:

• Reporting requirements (information that you must report to the insurer on a regular basis, such as the dates and times of competitions, the names and ages of members, the numbers and general duties of volunteers)
• Warranties (things that you must do on a regular basis such as test fire alarms, sprinklers, emergency doors or back-up generators)
• Notification of material changes in risk (such as letting your insurer know that your organization won that bid to host the Western Canadians, an event that will attract two thousand participants to your recreation complex)
• Territorial limits (these might restrict the coverage of your sports accident insurance policy or automobile insurance policy, if you travel outside the province or outside the country)

Conditions in insurance are critical, as failure to meet any single condition may void the entire insurance policy. For example, the collision insurance purchased on a rented automobile may not be honoured by the car rental company if the car was driven outside the territory identified in the agreement, if the car was being driven by a person not named in the agreement as a driver, if the car was speeding, if the car was being driven on a private as opposed to a public road, or if the driver of the car consumed any alcohol.

The lesson from this case is to take the time to read, and more importantly, to understand your organization's insurance policy.