| Rich,
when you tighten the fitting the o-ring compresses into the shoulder and the force is transferred axially. As soon as the threads sheared off there was nothing for the o-ring to press against and the axial force was lost. That's why your mate could remove the stub by hand.
I'm not saying you overtightened it - it doesn't sound so by your description - but you can't infer anything just from the fact it was easily removable.
It does seem a very odd sort of failure. I don't suppose you could post a picture of the failed surface. You can tell a lot from the shape/colour of the fracture face. (well, I can't obviously, but I'm sure someone here can)
__________________ whingeing pom |