XHTML of tree not valid

The generated hierachial ul-tree of $tree is not valid - the output is

<ul>
<li>term</li>
<ul><li></li></ul>
<li>term</li>
</ul>

but it has to be like

<ul>
  <li>term<br />
      <ul>
            <li>subterm</li>
      </ul>
  </li>
  <li>term</li>
</ul>