JUDI DENCH has been badly typecast as crusty but cozy Britons. Since she got older, Dench's great capacity for emotional brutality, the reservoir of sadistic pride in that drawling yet clipped voice, has never really been tapped lately. We get little doses, when she bullies James Bond or plays one or another formidable queen of England. The masterfully sardonic Notes on a Scandal gives Dench her chance to play a stalker; the lady cloaks her manipulativeness in what she believes is literary detachment.

The empathy-deprived often think of themselves as characters in a story. Thus Notes on a Scandal bears comparison to Strangers on a Train as a story of unwitting psychopathia. It is also one of the most enjoyable movies of the old year. It has a juicy subject, too: one of those everyday catastrophes when a female high school teacher is discovered having an affair with a male student. And on top of all this, the movie displays a sharp eye for how people live today. This may be the screen debut of the phrase "bourgeois bohemia"—and in connection with a perfectly nice if untidy family, yet.

If you look closely, you can see on the bulletin board of Barbara's classroom the school-of-Holbein portrait of Richard III, toying with his ring and looking awfully like Dennis Hopper. The Shakespearean monarch serves as a model for the conniving Barbara, who busies herself installing a loathing of history in her students at a slummy north London high school. It's the anti-Hogwarts, full of "future shop assistants and plumbers. In the old days we confiscated cigarettes and wank mags. Now it's knives and crack cocaine. And they call it progress."

Barbara notes the arrival of Bathsheba, called Sheba (Cate Blanchett), a gangly new art teacher with a mop of honey-colored hair. "Is she a sphinx or simply stupid?" Barbara wonders. Soon the two are friends. Barbara accepts a dinner invitation to Sheba's home and meets the family: Bill Nighy as the older and distracted but still ebullient dad, "a semi-pro drinker"; the couple's pretty but sulky daughter; and their severely retarded son.

One afternoon, Barbara discovers that Sheba possesses a terrible secret: an affair with a 15-year-old student. As custodian of the secret, Barbara is now custodian of Sheba, just as she's longed to be ever since she first saw her. And the clinging older woman gets vicious when thwarted.

In addition to being a psychological twister, consider the film as a culture-war story of the Blair age vs. the last of Victoria. The "bourgeois bohemia" Barbara chides includes Sheba's menopausal ceramics studio. There Sheba keeps a historical artifact, the Siouxsie and the Banshees album Kaleidoscope. The flash of the album prepares us for Sheba's last stand, when she dons her war paint of lipstick and thick mascara and raises a punk-rock shout as she throws herself into a mob of tormentors. We can love her at such a moment.

Director Richard Eyre throws the conscience-stricken a bone. Has any other feature film dared to suggest that mothering a Down syndrome child would be a strain? Blanchett shows us what it would be like, the burden of that kind of care. That's why the audience permits itself to understand a woman who would make the terrible mistake of robbing of boy of his innocence. Though the robbed one, Steven (Andrew Simpson), is, in fact, a horny and manipulative kid who sends pornographic text messages at precisely the wrong moment.

Contrast this cautionary tale of modern "permissiveness" with Barbara's sarcasm and her folly in considering herself England's last bastion. She is both a stern moralist and a madwoman. We get to chuckle at a line suitable for Dame May Whitty. Barbara gestures at a bench and says, "I once discussed Elgar there for three hours." But we also feel the burning desperation of her loneliness. And we can anticipate what will happen when her haughtiness turns pathological.

This fiesta of moral reverse-angles is photographed by Chris Menges, possibly the best there is at catching light under the lowering skies of London. Most modern English films go blue-white and glom onto the Gherkin tower as if it were the monolith in 2001; Menges loves to diffuse neon and Christmas lights in pub windows, blurring them in the and making them glow like stars. The funky brick streets have the appeal they had on old British Invasion record covers, back when tragic Yank kids would stare and stare at them, thinking they would just die if they couldn't go to London someday.

The ending isn't as shrewd as it could be. Having checkmated the two characters, Eyre has nowhere to go. The finale draws a laugh, but resembles too much the way conventional movies lead into their sequels. Also, since Notes on a Scandal is a really superb and original film, it falls into the danger any superb and original film faces: that is, it might be misinterpreted. Some might misread this as the story of a mad evil lesbian. It should be clear that Barbara has as much horror of lesbians as any other form of out-of-bounds modernism involving sex, art or anything else except sitting quietly in a room drinking tea and petting a kitty.

Notes on a Scandal (R; 98 min.), directed by Richard Eyre, written by Patrick Marber, based on the novel by Zoe Heller, photographed by Chris Menges and starring Judi Dench and Cate Blanchett, opens Jan. 5.

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