ATC positioning was not that accurate some years ago in class G. On one IFR night flight, out of cloud east of Melbourne, we were told of traffic that was overtaking us on the port-side. All three pilots were fixated looking for traffic in that direction and after a minute or so, one of the pilots turned to check starboard where we saw an old twin with no strobes approx 400ft diagonally separated on the same heading. ATC was content with this until the PIC asked for greater vertical separation. We had just had a ADS-B/s installed when they were not mandatory and assume this other old twin did not. Does anyone know how accurate the system would have been if we both had newer transponders?