I actually experienced this exact scenario on Sunday. We were joining on crosswind, and new there was one other plane doing circuits, but they hadn't made a downwind call. We probably should have asked for info from them at this point. However, we did a solide bit of looking and spotted them about 100ft higher and maybe 750 feet away. We dived down to generate separation, and extended the crosswind.
With no othe planes in the circuit, the instructor basically completed a 'wide' circuit and joined on base to provide time for the other plane to complete their circuit... not sure about what we should have done different here...
The instructor was off to make sure the other pilot remembers to make his calls!
Cheers,
Chris