A group of disabled Canadian veterans and their families have lost a fight against the federal government for an estimated $4.6 billion in pension interest.

In an emphatic decision on Wednesday, the Ontario Court of Appeal threw out the landmark case, which would have led to the largest damages award in Canadian history.

"We are obviously not only disappointed, but angry at the results so far," said Ray Colautti, lawyer for the veterans' families.

Some 30,000 veterans and their dependents have been looking for interest that accrued in a pension fund as far back as 1919 until 1990. In December 2005, the money was believed to have been worth $4.6 billion.

For eight years, the families argued that Ottawa breached its duty to the Canadian veterans by failing to credit their pensions with the interest over those decades.

In 1999, the class action was launched with Joseph Authorson — a veteran of the Second World War who spent most of his life in mental institutions — named as the lead plaintiff.

Although Authorson died in 2002 at age 88, the case continued without him.

The Appeal Court ruled that the Supreme Court of Canada had already decided against the veterans in a 2003 decision. The top court had ruled that Ottawa was within its rights to block the interest claims because of a provision in the Veterans Affairs Act.

The Ontario Court of Appeal said Wednesday in its judgment that "the judgment from the Supreme Court was final and binding, and that there was no basis in fact or law for the class to pursue its claim, or any aspect of it, once that judgment had been rendered."

While Ottawa has always admitted to mismanaging the veterans' funds, the government also passed legislation blocking claims for interest before 1990 — the year it decided to start paying the interest.

Even though an Ontario court agreed with the veterans and their families in 2005, Wednesday's ruling essentially means the court considered that judgment to be an error.

Lawyers acting on behalf of the veterans and their families said they are considering an appeal.