Several months later we were contacted by the buyer who claimed hat the suite was in such poor condition that he had had to throw it away. He was going to leave negative feedback unless we gave a refund. After challenging his thrown away claim, he admitted that he still had the suite, but some expert had looked at it and thought that it had been stored outside (which it hadn't).
Depending on how many months, they wouldn't be able to leave feedback anyway due to the cut off period for leaving feedback. I wouldn't have refunded them and made it clear why on a response to their feedback - if in fact they left some. If you only had their negative feedback out of your previous 100% record, sensible buyers would see that there was an issue with the buyer in that case when they checked the feedback - as any sensible buyer should do. You should have reported his blackmail threat to eBay and told them of his deception (told it was thrown away etc).
Dave.