Solved! It turned out to be the way I created the branch. I had taken a copy of the trunk folder in windows explorer and in the copy done a branch and switch. It was in this copy that that merge was failing.
I created a brand new folder and did a svn checkout on the branch. Merge worked beautifully after that. Thanks Andrew The information contained in this e-mail may be privileged and/or sensitive. It is intended for the addressee only and is not necessarily the official view or communication of the New Zealand Customs Service. If you are not the intended recipient you are asked to not disclose, copy, or make use of its contents. If received in error you are asked to destroy this e-mail and contact the sender immediately. Your assistance is appreciated.