The quartet was chosen as the critics' favourite at an industry gala on Monday, following performances by fellow nominees Miracle Fortress of Montreal, Joel Plaskett Emergency of Halifax; Chad VanGaalen of Calgary and Julie Doiron of Sackville, N.B.
Other nominees included Calgary's Feist, Hamilton's Junior Boys, and Montreal bands Arcade Fire, the Dears and the Besnard Lakes.
Shaggy haired front man Patrick Watson joked throughout the night that a win would bail the band out of a $16,000 rental car bill.
But when the band was crowned at the end of the night, Watson appeared genuinely surprised to be called onstage to accept a giant novelty cheque.
"I know it sounds cheesy, but seriously, it's a real honour just to be nominated with all these amazing artists," said Watson, noting he was rooting for VanGaalen to take the prize.
Backstage, a jovial Watson kept media laughing with jabs at Montreal cohorts Besnard Lakes and his assertion that he and bandmates would spend $4,000 on "a lot of cheeseburgers and a hot tub."
But most of the cash would settle a rental car bill incurred in a car crash just outside of Fargo, N.D., earlier this year, he said, clutching a beer in one hand and a bottle of vodka in the other as he launched into the tale.
It was April and the band had just performed at the Junos in Saskatoon, where they were also nominated for new artist of the year, he said.
The band crossed the U.S. border and drove straight into a blizzard, losing control of the van while grooving to Pink Floyd on the radio, said Watson, re-enacting the event with a brief serenade and a twirl to demonstrate how the van flipped over.
Luckily, no one was injured but months later they were stuck with a massive bill, said Watson, currently on tour in Quebec, and set to tour Europe in October and November.
Jokes aside, the scruffy bearded Watson said he was honoured to have taken the prize, decided on by a jury of journalists based on creative quality, regardless of musical genre or sales figures.
"Each band sounds really different and it's really (a) proud (feeling) when you travel the world and see that we're not a music scene and we're not selling a lifestyle and each band just does it the way they like to do it," he said.
"It's a big honour to come from that community, so cheers."
To be eligible, an album had to be released between June 1, 2006, and May 31, 2007.
The short list was drawn up from submissions by more than 170 Canadian music journalists, broadcasters and bloggers who provided their top five picks.
A jury of 11 music experts deliberated over the winner in a side room while nominees enjoyed performances and a sushi dinner.
Critics of the shortlist were quick to emerge when the names were announced this summer - several bemoaned the predominantly indie-rock flavour while others wished for more regional diversity.
Complaining that none of the bands are francophone, one Quebec professor filed a complaint with the Competition Bureau alleging English acts have an unfair advantage.
But founder Steve Jordan disputed that, noting submissions came from journalists across the country, including 14 from francophone media outlets and dozens of bilingual reporters.
"This year, there just wasn't a critical mass for a French language record to make the shortlist," Jordan said.
He added that he's considering releasing a longer short list next year so that people see the breadth of acts that are being considered.
Last year's winner Owen Pallett of Final Fantasy said he spent much of his prize money paying off his boyfriend's school debt, and mused on how he would like to see the contest improved.
"We should divide the award into two awards-one for the bands who don't have credit card debt and the bands that do. I think that would be a coup. In fact, I'm going to try and make that happen," he said.
"The Arcade Fire do not need $20,000. Leslie Feist definitely doesn't need $20,000."
This year's jury consisted of five journalists from Toronto, two from the Maritimes, two from Montreal, and one each from Edmonton and Ottawa.
