Ebay have refunded a purchaser under Ebays own policy. The trader is another business and we will have to collect the item which we know they have misused. What can we do?

Clearly if you are trading on ebay as your main channel to market you will have to be sensitive to the policies so as to avoid ebay banning you. However if your terms and conditions are robust and bearing in mind that traders do not enjoy the same rights as consumers you could take the view that your customer is in breach of contract i.e. you have supplied goods which they effectively have not paid for. This seems to be a fundamental breach of the contract terms for which they could be pursued through the County Court with all that entails. Just to reiterate you would need to ensure that this was not in contravention of your agreement with ebay and you would need to ensure that your agreement was enforceable.