Is there a distinction between the test that is “arguable” and that a case has a reasonable prospect of success?

There is no distinction between the test that a case is “arguable” and the test that a case has a “reasonable prospect of success”: Carr v. Cheng at para. 21.

For a court to determine whether an action has a reasonable prospect of success, it must know what the cause of action is, the facts alleged to give rise to it, and the loss alleged to have been suffered by the corporation: Mikulic v. Peter at para. 12.

“Best interests” can only be interpreted as speaking to a more rigid consideration of what is good for the corporation than what would be required under “interest”. “Best interests” can be defined as the maximization of the value of a corporation. It is best for a corporation to be profitable, well-capitalized, and with strong prospects. The deterioration of a corporation’s financial stability should be avoided. See Carr v. Cheng at para. 25.

In Carr v. Cheng, leave to bring a derivative action was granted. Madam Justice Dillon found that the core financial stability of the corporation in question was threatened and the inconvenience to the corporation of engaging in litigation was outweighed by the potential for the resolution of financial uncertainty. She held that the intended action had no appearance of being either frivolous or vexatious and that it could reasonably succeed.