The leading members of the association were John Batman, a farmer, Joseph Gellibrand, a lawyer, Charles Swanston, banker, John Helder Wedge, surveyor and farmer, Henry Arthur, nephew of Lieutenant Governor George Arthur of Van Diemen’s Land, and various others including William Sams, Anthony Cottrell, John Collicott, James Simpson, John Sinclair, Michael Connolly, Thomas Bannister, and John and William Robertson .
Gellibrand prepared legal deeds for the transfer of an interest in the land for payment of an annual tribute, copies of which Batman took with him in May 1835 to Port Phillip, accompanied by some white servants and aborigines from New South Wales. Batman’s treaty with the aborigines of Port Phillip is the only example of any settlers (official or unofficial) giving recognition to the rights of the aborigines to the land. While the annual tribute to be paid by the association seems trifling in comparison to the ultimate value of the land after the establishment of sheep stations in later years, the members of the Port Phillip Association did not intend the treaty to be a fair commercial transaction, but a means of obtaining permission from the aborigines to avoid resentment (and subsequent violence) after settlement.
For some time Batman's Treaty, as it came to be called, was assumed by some historians to be a forgery, but the recollections of the aboriginal elder Barak, who was present at the singing of the treaty as a boy, established that Batman, with the aid of his New South Wales aborigines, did in fact participate in a ceremony with the Port Phillip Aborigines for permission to settle amongst them. In aboriginal culture, this ceremony was called a tanderem.
Batman sailed from Launceston in the schooner Rebecca in April, 1835. In June Batman went up the Yarra River and noted in his journal “this is the place for a village”. After leaving some men to build a hut and start a garden, Batman and the Rebecca returned to Van Diemen’s Land. Here Batman showed Wedge where he had explored and, from these details, Wedge prepared the first map of Melbourne, in June 1835, showing the location Batman had chosen as the site for the “village”.
The deeds which Batman took back to Van Diemen’s Land were intended not for the aborigines, who had no need of title deeds. Existing British policy (the Nineteen Counties Order) was designed to prevent such settlement, and Batman hoped to convince the colonial and imperial authorities that the association had entered into a scheme for settling the district which would, it was hoped, avoid bloodshed between whites and blacks. According to Batman’s petition to George Arthur, he and Wedge would proceed immediately to the district with stock, and only married servants (with their wives) would be allowed to accompany them, reducing the chances of conflict arising from interference with native women.
On 26 August the Governor of New South Wales, Sir Richard Bourke issued a proclamation that effectively voided Batman's treaty, whatever its merits, as the British government did not recognize aboriginal title to the land. This in effect made any potential settlers trespassers, although the governor recognized the need for further action and recommended the establishment of a township and land sales. Batman and the Rebecca had already sailed on the return journey, but spent several weeks at a temporary site at Indented Head. When they returned to the Yarra River site on 2 September, they found the area already occupied by an independent expedition financed by a Launceston businessman, John Pascoe Fawkner, which had landed on 30 August. The two groups eventually agreed to cooperate in distributing the land in the area, but the sequence of events would provide room for future debate over the credit for Melbourne's founding.
While the government in London was deciding what steps it should take in relation to the unlawful occupation of this remote and unsettled part of the existing colony of New South Wales, other settlers from Van Diemen’s Land followed suit, and soon Port Phillip became inundated with stock, squatters and servants, including escaped convicts. Inevitably, conflict with the aborigines followed. Governor Bourke was authorized to establish a settlement in April 1836, and the town of Melbourne was surveyed and laid out in 1837.
The claims of the Port Phillip Association were only recognised to the extent of £7,000, allowed as a reduction on the purchase price of land bought by the association at public auction. Most of the members sold out to Charles Swanston, and the name was changed to the Derwent Company before being dissolved in 1842. The obligations under Batman’s treaty to feed and clothe the aborigines were assumed by the New South Wales colonial government, although proper protection was not afforded, especially in the remote parts of the colony.