Thanks for your question, Joshua.
Common law is made by judges in a court, using precedent—decisions made in previous similar cases—to decide how they will judge a case before them. If no past cases with similar circumstances exist, a new decision is made, which would then become a precedent for a future similar case. If no statute law—law made by Parliament— applies to cover a particular situation, common law will apply; however, statute law always overrides common law.
Australia inherited its system of common law from Britain. The name comes from the idea that common law applied to everyone in society, not just those—such as religious ministers—who had particular rules relating to them.