bill - 2:05 am on Nov 19, 2012 (gmt 0)
Welcome to WebmasterWorld digitLeo.
Unfortunately this does happen. You don't have much recourse once the domain has been snapped up by someone else regardless of the registrar's incompetence. Take the refund and take your business elsewhere.
In the future you may want to max out the registration of your important names for as many years possible.