Execution of such this test will FAIL:
package org.gradle.sample.testing;

import org.testng.annotations.Test;
import static org.testng.Assert.assertTrue;

public class SimpleTest {
@Test
public void testThatPasses()

@Test(expectedExceptions = IllegalStateException.class)
public void testThatThrowsExceptionAndPasses()

}

gradle clean test
:clean
:compileJava
:processResources UP-TO-DATE
:classes
:compileTestJava
:processTestResources
:testClasses
:testTest org.gradle.sample.testing.SimpleTest FAILED
1 out of 2 tests failed.

FAILURE: Build failed with an exception.

• Where:
  Build file '/home/tomek/Documents/gradle/cookbook/testng/build.gradle'

• What went wrong:
  Execution failed for task ':test'.
  Cause: There were failing tests. See the report at /home/tomek/Documents/gradle/cookbook/testng/build/reports/tests.

• Try:
  Run with -s or -d option to get more details. Run with -S option to get the full (very verbose) stacktrace.

BUILD FAILED

Total time: 12.168 secs

The html report will show all green (and rightly so).

It is broken in gradle-0.9-20100309130436+0300-bin but worked fine gradle-0.9-20100302224259+0100 (or some previous version, not sure about that).

See attached project.