(b) That's right. The effect of frustration on a contract is to excuse performance of any obligations that have not already been performed at the time of frustration. Such obligations are treated as discharged by the frustrating event, so that neither party to the contract remains bound to do anything. Importantly, frustration does not affect anything already done under the contract before the circumstances changed. The contract is not made void ab initio: it is only treated as discharged to the extent that it remains unperformed at the time of frustration. This means that answer (c) is wrong.
Although the common law does not allow for the enforcement of any contractual terms after frustration, or the recovery of anything done before frustration, legislation has been enacted in New South Wales, Victoria and South Australia that allows recovery of the value of performance made but for which no counter-performance can now be enforced. This legislation would allow Tyler to recover the advance payment made to Sunny. The facts suggest that the contract was made in Melbourne Victoria, so the Frustrated Contracts Act would apply.