Well, if not for over-cautiousness of Regia Marina command (which insisted that Italian ships must engage only in very favourable conditions), there were at least two situations when Royal Navy might found itself beaten...
I don't see the Regia Marina as overly cautious like the Germans. After all, the Raid on Taranto was the night of 11-12 November, and the RM was in action at Cape Teluda/Spartivento two weeks later. They were hardly cowed by the RN or the damage the FAA inflicted
The RM was handicapped by poor recon and an overly complex scouting system. If I recall correctly, in the case of the latter Regia Aeronautica aircraft could not communicate directly with Regia Marina ships at sea. They had to contact their base, which contacted Super Aero in Rome, who contacted Super Marina in Rome, who contacted the ships' base, who contacted the ships at sea.
Operation Hats is a good example of a powerful Italian task force deployed with a good chance of defeating any of the opposing RN forces, but failed because of poor RA recon:
Operation Hats, 29 August-6September, 1940
British operation to reinforce Mediterranean Fleet.
Force F
BB
Valiant
CV
Illustrious
CLAA
Coventry
CLAA
Calcutta
Reinforcement squadron, proceeding from Gibraltar to Alexandria
Force H, covering Force F
BC
Renown
CV
Ark Royal
CL
Sheffield
12 DD
On 31 August, 9 Swordfish attack Port Elma on Sardinia, and Force H turns away.
South of Sicily, Force F is met by the
Mediterranean Fleet
BB
Warspite
BB
Malaya
CV
Eagle
3rd Cruiser Squadron (CL
Glocester, CA
Kent, CL
Liverpool)
7th Cruiser Squadron ( CLs
Orion and
Sydney)
13 DD
The Med. Fleet is also providing cover for a convoy to Malta consisting of:
3 Transports
4 DD
Italian Fleet attempts to intercept with
BB
Vittorio Veneto
BB
Littorio
13 CA+CL
39 DD
As an aside,
Illustrious was flying the flag of Rear Admiral Lumely Lyster, former CO of
Glorious, the Mediterranean Fleet carrier, who helped develop a plan to a plan to attack the Italian Fleet at its base at Taranto, after the Abyssinian Crisis. One Dudley Pound was C-in-C Med at the time...
Regards,