Rear Wheel Nut Torque

Was my initial thought to, but no. It’s further in board of the axle unit.

 

Any idea where the failure is?

 

Never use an impact wrench.

 

To loosen, not to tighten. I've stopped using mine for breaking off because it rarely works. Good old two foot breaker bar with an extension tube on it.

 

And against the rear brake, not the gearbox...
Ideally you need a fat friend to sit on the bike and hold the rear brake.

 

Or Jake the peg.