She lost her seat in Parliament, period. So she would have been replaced as Prime Minister even if her party had retained control of Parliament.
She lost her seat in Parliament, period. So she would have been replaced as Prime Minister even if her party had retained control of Parliament.
Actually, it was both. In the 1992 national election, the PCs were decimated, reduced from a majority government to two seats. (Incidentally, one of those two Conservative MPs, Elsie Wayne, passed a way a few days ago.) The Liberals won the majority, so they formed the government and their leader (Jean Chretien) became the prime minister.
Had the PCs won a majority and Campbell lost her own seat, she would still have been Prime Minister. This actually happens not infrequently in provincial elections; Nova Scotia party leaders have lost their own elections six times since 1992.
Typically what happens when a party leader loses his own riding is that an MP in a safe riding is asked to resign, triggering a by-election, in which the party leader is the candidate. Or he may just wait until the next general election and lead the party while sitting in the public gallery. John Turner became Prime Minister when he replaced Pierre Trudeau as Liberal leader in 1984, but opted not to seek a seat until the next national election. (He won his seat, but the Liberals were defeated.)