1. (b) That's wrong. Broadly speaking, the law of defamation protects a person's reputation from being wrongfully harmed by others. The basic idea is that a defendant is made liable for defamation if they publish material that identifies the plaintiff and has the capacity to harm the plaintiff's reputation. The defendant may be able to escape liability by establishing one of the recognised defences.
Since 2006, the various states of Australia have enacted almost uniform defamation legislation, based on older common law principles.
In the present case, B's statement to C constitutes the publication of a statement. Publication does not have to be in writing, or to more than one person. The statement is likely to lower A's reputation because it suggests A is guilty of a criminal offence. A is identified by name in the statement. So, unless he can establish a defence, B would be liable for defamation.