I'm pretty certain that both instructors would have a greater respect for the preservation of life, than to deliberately place themselves, their student and the aircraft deliberately into harms way for the sake of teaching the student a lesson!
You can be damn sure that this is the case. I don't know of any sane FE or IFR Instructor that would allow a situation to develop that would result in a possible mid-air. I'm also sure that if CASA became aware of any such rogue that the FER would 'placed on hold'
Considering that IFR traffic was passed to and acknowledged by both aircraft, the answer to this one is most likely recorded on the CTAF frequency. Hope to Christ the recording is complete.