Give Paypal the number of the Small Packet. It should be viewable on the Canada Post site, since it is within the time for insurance claims.
Actually, you may be able to print out the info from either your PP account or from canadapost.ca. Those listings seem to last much longer than the eBay ones.
Since the Canada Post insurance is only on damage or loss in transit, you can't claim on the $100 insurance coverage that CP offers.
Whether the buyer is scamming on the unauthorized payment claim or whether he is willing to hurt you rather than discipline a family member, he is not himself an honest person. Shame on him.