Here's the recommended procedure in these cases.
PayPal give you 10 days to respond, wait until day 9 and hope the buyer receives the item.
If the buyer does not receive, refund the payment and inform the buyer that you have done so and ask that ge resends payment when the item arrives.
If the buyer never comes through then file a claim with Canada Post (assuming small packets with included $100 insurance).
There is no point in attempting to fight PayPal over the dispute, refunding eliminates any possibility of having your account frozen and also I believe there may be a service charge is the dispute is found in favour of the buyer (perhaps that's only via a credit card chargeback).
It's maybe 50/50 that your buyer will be honest and pay up when the item arrives but if not you may find some happiness filing a claim with Canada Post (use a copy of your refund to establish the value).
Lots of aggravation but this is the best you can do as sellers cannot win a dispute for non-delivery of untraceable small packets of lettermail.
Ben

"What else could I do? I had no trade so I became a peddler" - Lazarus Greenberg 1915

"What else could I do? I had no trade so I became a peddler" - Lazarus Greenberg 1915
- answering Trolls is voluntary, my policy is not to participate.