You can't enforce a contract for services against a minor for something like this, so the fact that mildflame ticked "yes" to the terms and conditions when signing up to paypal is voided entirely when held up against Australian contract law. This is why they have been so quick to process the money and close off the account.

I have seen numerous cases similar to this listed with the TIO (Telecommunications Ombudsman) for enforcement of mobile phone contracts against minors and in nine out of ten cases, the complaint is upheld (found in favour of the minor).