Yeah, go after him as hard as you can. Try to use free services as much as possible such as the Landlord Tenant Advisory people that trout mentioned. If you sue the guy it sounds like it's probably a slam dunk, but the PITA factor is pretty high and if you hire a lawyer it may cost you more than your deposit.
As mentioned earlier, there are significant penalties under the Residential Tenancies Act for failing to keep deposits in a separate interest-bearing account. That alone should scare the guy into playing ball.
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