The studies presented in this paper provide a first experimental test of the Particle Flow Algorithm (PFA) concept using data recorded in high granularity calorimeters. Pairs of overlaid pion showers from CALICE 2007 test beam data are reconstructed by the PandoraPFA program developed to implement PFA for a future lepton collider. Recovery of a neutral hadron's energy in the vicinity of a charged hadron is studied. The impact of the two overlapping hadron showers on energy resolution is investigated. The dependence of the confusion error on the distance between a 10GeV neutral hadron and a charged pion is derived for pion energies of 10 and 30GeV which are representative of a 100 GeV jet. The comparison of these test beam data results with Monte Carlo simulation is done for various hadron shower models within the GEANT4 framework. The results for simulated particles and for beam data are in good agreement thereby providing support for previous simulation studies of the power of Particle Flow Calorimetry at a future lepton collider.