Alpha Transparent Textures

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Xyle

I am trying to make a tree with alpha transparent texturing for the leaves ilo of masked textures. The problem is, everytime I use an alpha texture, parts of the model are rendered on top of other parts like a zorder issue. Ive created a small demo to show this problem. Does anyone have any ideas whats happening with my alpha texture?

Download the zip file here, its 835kb
http://dodownload.filefront.com/9489881//1532576500828fdb31f71838a901ef86d5322449fe5b0b3eb4710af0fdc69be267933ba60ccc7278

Thanks!