The pilot of VH-KST, a Cessna 210M aircraft, was instructed to extend the first crosswind leg of his circuit for Runway 36 to allow the departure of VH-JSH, a DHC-8 aircraft from Runway 29. As JSH rotated for takeoff, KST turned downwind and crossed in front of JSH. The crew of JSH saw KST but did not take evasive action. JSH passed approximately 1,000 m behind KST at the same altitude, about 1,000 ft AMSL. The pilot of JSH confirmed the miss-distance estimation. The investigation revealed that the pilot of KST did not recall any ATC instructions to maintain first crosswind. The transcript of communications of the automatic voice recording (AVR) tape showed that the pilot acknowledged the crosswind instruction but did not respond to three subsequent transmission directed to his aircraft by the tower controller. The chief pilot of the company which operated KST was on the aircraft supervising the pilot in command. He said that the communications system in the aircraft had an unserviceability which resulted in the pilot operating the VHF radio with a headset and a hand microphone. The supervising pilot was not able to monitor air to air communications due to the unserviceability.