The Australian legal system has 2 main sources of law, namely the Parliament-made law and the case law or the common law. The primary source of law in Australia is the Parliament-made laws. As the representatives are elected to the House by the people, statutes and laws can be made keeping in mind the needs of the people. Case laws on the other hand are made by the judges in the courts. Once the court gives its decision, the same would apply for similar circumstances or instances (precedent).
The decision would be binding on courts in the future. Another source of law that can be considered in the Australian legal system is the international law that would be applicable in case Australia is a signatory to an international convention, or a bilateral/multilateral agreement (Governments of Australia and South Australia, 2007). Judges are usually, unable to make laws. The law-making capabilities are usually done by the Legislation. The judiciary would be interpreting laws and filling up the gaps that have been left by the legislation.
However, there may be instances in which a strong judiciary can create a new law that may have a strong impact on the society such that it would place the importance of the rule-making authority on the judiciary. Such instances include old, inappropriate and laws that go against human rights. There may be several areas of law such as contract laws, tort laws, negligence, etc, which need to be decided on a case-by-case basis, and develop judicial precedents for future cases. If the statues are so rigid and unclear, then it becomes important for the judge to develop new laws.
In some instances common laws may also be difficult to apply. However, there is another school of thought that believes that judge-made laws do not exist, and the statutes would be providing principles upon which case laws which would be developed. Any kind of a judge-made law would be a trespass on the powers of the legislation (Sackeville, 2001). Another reason why judges cannot make laws is that often if a judge creates a law that applies in a particular case, it would apply retrospectively, which destroys the basic purposes of the law.
Thirdly, all the Statutes would overrule the case laws. There may be three kinds of relationships between the legislation-made laws and the common law. Firstly, common laws may supplement the legislation-made laws and in this way strengthen the legal process. Secondly, Parliament-made laws may replace a common law. Thirdly, if a particular Parliament-made law is outdated or is threatening the basic human rights, then the Court can decide that the same should be scrapped. Hence, it can be said that judges can state the law within the limits of the legal world.
There are two ways in which laws can be interpreted by the advocate or the judge. One way is to determine what the statute might allow. The second way is to determine what the statute would definitely permit (Gleeson, 2001). Often the appellant courts and the constitutional courts would be creating laws. If any statute would be impeding the Constitution, the same statute can be invalidated. A court may also implement a new rule or principle if it feels that the result of just implementing a law would not have desired results. This could even be in non-constitutional areas (Sackeville, 2001).