In a bowl combine the mince, 1 clove crushed garlic, 1 diced onion, parsley, salt, pepper and egg. Mix well and shape into 12 meatballs.
Heat olive oil in a frying pan over medium heat. Fry the meatballs, turning occasionally, until evenly brown and cooked through, about 10 minutes. Set aside.
Add the remaining onion and garlic and cook over medium high heat until softened, about 5 minutes. Add the capsicum and cook 3 more minutes. Stir in the tomatoes and season with basil and more salt and pepper if needed.
Cook the spaghetti according to packet directions.
Meanwhile, return the meatballs to the sauce and heat through, 5 more minutes. Serve over the pasta with additional basil and Parmesan cheese.