The test adds a subdirectory with

 svn add subdir
 svn add ... subdir/foo.txt subdir/bar.txt

Subversion 1.7 fails on the second command with

 svn: warning: W150002: '.../subdir/foo.txt' is already under version control
 svn: warning: W150002: '.../subdir/bar.txt' is already under version control
 svn: E200009: Could not add all targets because some targets don't exist

because it considers adding an already-versioned file to be an error.
Avoid the problem by using

 svn add --depth=empty subdir

to add the subdirectory without the files it contains.