Presence of index.xml result in non process of navigation

If I have a project with sub-projects and the top level project has an xdocs directory with an index.xml and the users own navigation.xml (containing the reactor lines to get sub-project navigation), when it creates the multiproject site, the top-level index.html doesn't have the navigation processed - i.e it just contains the $reactor stuff.

If I remove the xdocs/index.xml it creates an index.html fine with the correct navigation.