What is the proper way to deal with the following subversion conflict?

Question

I am using subversion to manage my source code but I often run into a problem, any time I rename a folder and I modify a file in that folder, subversion goes haywire when I try and merge.

I am looking to find out how other people manage this kind of conflict.

Instead of trying to explain exactly what I did to get the issue, here is a script that generates the conflict I am asking about :

Run this script on a Linux machine that has subversion installed and it'll create a conflict. Make sure the folder /tmp/svn/ contains nothing otherwise this script will destroy whatever is in the folder :

#!/bin/bash

svn --version

mkdir /tmp/svn

cd /tmp/svn/

rm -rf /tmp/svn/repo
rm -rf /tmp/svn/co
rm -rf /tmp/svn/work

svnadmin create /tmp/svn/repo/

svn mkdir file:///tmp/svn/repo/branches/ --message ' setup '
svn mkdir file:///tmp/svn/repo/trunk/ --message ' setup '
svn mkdir file:///tmp/svn/repo/tags/ --message ' setup '

svn mkdir file:///tmp/svn/repo/trunk/folder --message ' setup '
svn mkdir file:///tmp/svn/repo/trunk/fun --message ' setup '

echo date > tmp

svn import -m 'setup' tmp file:///tmp/svn/repo/trunk/folder/MyCode.txt

svn cp file:///tmp/svn/repo/trunk/ file:///tmp/svn/repo/branches/work --message 'branch'



svn co file:///tmp/svn/repo/branches/work/ work

date >> work/folder/MyCode.txt

svn commit work/ --message 'Commit file'

svn up work/

svn rename file:///tmp/svn/repo/trunk/folder file:///tmp/svn/repo/trunk/fun/folder/ --message 'rename trunk'


svn merge ^/trunk work

Here is the conflict that is created by this script :

--- Merging r7 through r9 into 'work':
C work/folder
A    work/fun/folder
A     work/fun/folder/MyCode.txt
--- Recording mergeinfo for merge of r7 through r9 into 'work':
U   work
Tree conflict on 'work/folder'
> local dir edit, incoming dir delete upon merge
Select: (r) mark resolved, (p) postpone, (q) quit resolution, (h) help: p
Summary of conflicts:
Tree conflicts: 1

Here is some information from my subversion : svn, version 1.8.8 (r1568071) compiled Aug 13 2014, 17:12:39 on x86_64-pc-linux-gnu

What is the correct way to resolve this issue?

Thanks,

David