"It takes courage to recognize the real as opposed to the convenient," observes Judi Dench in Notes on a Scandal. The irony here is that her character, a spinster schoolteacher named Barbara Covett, is among the most delusional in movie history. Next to her, Fatal Attraction's Alex Forrest is a paragon of mental health.

Covett, a self-described battle axe, is lonely, bitter and more than a little predatory. When not delivering history lessons to Islington middle-school students she contemptuously describes as "future plumbers and shop clerks," she spends hours in her cramped flat pouring her thoughts and feelings into notebooks. She grades her days. On good ones, she sticks a gold star to the page. They're rare. The script has been adapted by playwright Patrick (Closer) Marber from Zoe Heller's 2003 novel What Was She Thinking? and turns the entries into a series of deliciously acid-tongued voice-overs (think Bridget Jones's Diary meets Who's Afraid of Virginia Woolf?).

As the schoolyear begins, Dench is provided with fresh prey in the form of a novice art teacher played by Cate Blanchette. Sheba Hart's problem is an unchecked sense of entitlement. She has looks, money, a husband and the screwy belief that, having spent the last 10 years raising a child with Down syndrome, she's earned the right "to transgress, to be bad." Even as Dench is fantasizing about Blanchette, Blanchette finds herself fantasizing about a 15-year-old student.

When the older woman discovers that the younger has acted on her impulses, she's overcome with unjustified feelings of outrage and betrayal. But then, cunning monster that she is, Covett remembers that knowledge is power. By not turning Hart in to school officials, Covett obligates her to play a role in her imaginary love affair. "I could gain everything," she writes in her diary, "by doing nothing."

The arrangement is mutually beneficial, until Sheba is forced to choose between her family and her ever-more-controlling friend. Hell hath no fury like a woman scorned. Unless you count fury like a really wacked-out woman scorned, which is much, much worse. Especially when the dialogue is as brilliantly barbed as it is here, and delivered by actresses as formidable as these.

As directed by Richard (Iris) Eyre, Notes on a Scandal offers a literate, consistently perceptive portrait of two women well past the verge of breakdown and on a collision course with self-destruction. Big-screen character studies don't get more mesmerizing than this. Make a note to see it. You're guaranteed a gold-star day.