At 0349.34, the pilot of VH-EXC reported to Flight Service (FS) that he was over St Helens at 7000 feet, commencing descent and advised he would report again by 0410 or on missed approach. His intention was to make a practice NDB approach. In response FS advised him that there was no IFR traffic. At 0357.00, the pilot of VH-HFD reported that he had departed St Helens at 57, was tracking 243 degrees (from the NDB) and was on climb to 8000 feet. (VH-HFD was running 20 minutes early on flight planned estimate for departure St Helens). FS asked him if he had copied VH-EXC (as traffic) to which he replied negative. FS then advised VH-HFD that VH-EXC was in the St Helens area for an NDB approach. The two pilots then made contact with each other. By this time VH-HFD had left 5000 feet on climb and VH-EXC was at 2000 feet, tracking outbound in the NDB approach. Conditions were IMC and it was apparent that the two aircraft had gone through each other's levels, possibly in close proximity. From timings on the transcript and information provided by the pilots, it was calculated that VH-HFD would have commenced its takeoff roll at about 0352. Engines would have been started two to three minutes prior to then at about 0349. The pilot of VH-HFD said that he made taxy broadcasts on both the FS and Common Traffic Advisory Frequency (CTAF). Both aircraft were dual VHF equipped and both pilots said they were monitoring both CTAF and FS frequencies. The pilot of VH-EXC did not hear either of the taxy calls reportedly made by the pilot of VH-HFD. The pilot of VH-HFD did not hear the call made by the pilot of VH-EXC on arrival over St Helens at 7000 feet. On timings, it is possible that that broadcast was made prior to the pilot of VH-HFD commencing a listening watch on the two frequencies. On arrival over St Helens at 7000 feet, VH-EXC entered the holding pattern to lose altitude. The outbound leg of the NDB approach was commenced at 4500 feet probably at about 0355. The outbound track is 107 degrees. The pilot of VH-HFD departed from runway 08 at about 0352 and maintained runway heading until reaching 2000 feet where he made a right turn to track back to the NDB while continuing to climb. It is obvious from these timings that the two aircraft passed in close proximity both vertically and laterally while in cloud and on close to reciprocal tracks. Significant Factors The following factors were considered relevant to the development of the incident: Neither pilot heard advisory broadcasts made by the other pilot. It is possible that the pilot of VH-HFD may not have commenced a listening watch at the time the pilot of VH-EXC made his call on arrival over St Helens but the pilot of VH-EXC should have heard the calls from VH-HFD. Melbourne FS can not receive calls made on the ground at St Helens so were not aware that VH-HFD was taxying and were therefore unable to pass traffic information to VH-EXC. In addition, VH-HFD was running 20 minutes early on flight plan so FS could not pass traffic information in anticipation of a planned departure time. The pilot of VH-HFD did not establish contact with Melbourne FS as soon as possible after becoming airborne. Instead, he waited until he had climbed to 5000 feet and established the aircraft on the departure track. This denied both FS and the pilot of VH-EXC the opportunity to become aware of the whereabouts of VH-HFD.