If you used a shipping service that included tracking/delivery confirmation, check with the shipper (most use Canada Post usually through Paypal) and ascertain if it shows as delivered.
If it does, you have no further responsibility, but of course you need to schmooze your buyer. Tell him to ask family and neighbours as well as looking in his 'stock'.
Most businesses would record the arrival of shipments, but...
If you didn't use tracking, and less than 45 days have passed, basically you have to refund him. If you don't he goes to eBay/Paypal and makes a Dispute, they refund, they come after you for the money and the buyer leaves negative feedback. Also you get a black mark on your selling record.
I hope you are adding a few pennies to every shipping charge to self-insure. If so, the refund warranted or not, comes out of that fund and you don't really lose anything. You can also use postal insurance and third party insurance but for low value items, self-insurance is usually cheaper.
