Anti-auteur Rolf de Heer, Australia’s Steven Soderbergh in the sense that nobody — probably not even himself — can possibly predict what he’ll do next, hones in on domestic horror in its purest and most prosaic sense in the darkly funny The King is Dead!

Noisy neighbours with a penchant for drug deals, domestic violence and round-the-clock rancour. Home break-ins. Bad investments. The slowly manifesting sensation that your day-to-day life is being tarred by what’s happening on the other side of the fence.

We’ve all been there, to some extent. De Heer (Bad Boy Bubby, The Tracker, Ten Canoes, Dr Plonk, etc) stretches the neighbours from hell shtick to damn near breaking point, imagining how decent pushed-to-the-brink people would react if the party next door never died down and the ramifications of sharing a street with dangerous dentally challenged loons were very, very close to home.

Happy-go-lucky average Joe/Janes Max (Dan Wyllie) and Therese (Bojana Novakovic) buy a house in what appears to be a quaint neighbourhood. On one side of the fence lives a warm and considerate couple, a friendly family unit complete with an adorable young daughter. On the other side lives King (Gary Waddell).

King’s kingdom isn’t a salubrious abode: it’s a dirty and disgusting hovel populated by drug dealers, layabouts and people unfamiliar with the concept of getting up to work in the morning. After ambitiously searching for the bright side — maybe living next to drug dealers means they might, erm, keep an eye on the property? — Max and Therese are eventually driven to take matters into their own hands.

With his vacant junkie eyes, air-headed demeanour and the aura of a man who grew up on a diet of gruel and electric shock therapy, Gary Waddell is a revelation as King. It’s a performance so good, so unrelentingly deadpan, so funny and dramatic, so familiar and yet so unerringly fascinating — like watching some kind of extraterrestrial painting — it longs to be described with words like “mesmerising” and “unforgettable,” which it is.

Spatially, The King is Dead! is close to a single setting film, the action physically moving only metres away from Max and Therese’s house. The house is not so much a character but a point-of-view, the centre around which a small, tense, oxygen-deprived universe orbits.

If the dramatic momentum around the half way point gets a bit repetitive, as the sound and fury next door refuses to go away for the characters and the audience, it’s for a reason: to hammer home (so to speak) the remorselessness of the antagonists and the helplessness of Max and Therese’s situation.

The plot snakes into an experiment, of sorts, in capturing everyday middle class horror, with a strong “what would I do?” bent. The film is determined to subvert expectations, which it does at every major turn, to the point at which the entire exercise becomes, like the final reel of the film, gloriously redundant, as much a beginning as an end and vice versa.

The King is Dead! is a deliciously dark genre mash-up, coy and explorative but tight and insular, sprayed with wry laughs and a genuinely foreboding undertone. It is the standout Australian film of 2012, a year in bad need of more local gems, more tough to peg features thoughtfully constructed and consistently entertaining. The worse thing about it is its limited release; see it, if and when you can, because it won’t be playing in cinemas for long.

The cast are uniformly excellent, including Luke Ford and Anthony Hayes in rough-as-guts bit parts, but Gary Waddell is out of this world good. If the film’s offbeat, expectation subverting structure doesn’t woo you, his performance will. Waddell deserves a kingdom that stretches much further across this fair land. He doesn’t deserve an AFI. He deserves the Order of Australia. Long live the King.

The King is Dead!’s Australian theatrical release date: July 12, 2012.