[4][5] He also delivered despatches to England announcing the fall of Fort Lévis in 1760,[2] which was near where the town of Prescott, Ontario would later be founded and named in his honour.

In his new position, he pursued a programme of improvements to military fortifications and infrastructure, which he found to be dilapidated and unsuitable for defense against external enemies, but was hampered by financial constraints.

[2] An attempt by colonial officials in Lower Canada to use corvée labour for a road improvement scheme led to widespread rioting, and the resulting unstable political situation in Canada over the winter of 1796–97 created what historian F. Murray Greenwood characterizes as a "garrison mentality" amongst Anglo-Canadian elites.

In an October 1796 letter to Home Secretary Lord Portland, he wrote that "His Majesty's English subjects here compared to the [French Canadians] are not in a greater proportion as Seventy to Two Thousand.

"[9] Leading Anglo-Canadian elites such as Chief Justice William Osgoode and Attorney General Jonathan Sewell believed the riots over the road scheme were orchestrated by French ambassador to the U.S. Michel Ange Bernard Mangourit, and "Prescott spent an uneasy winter fearing that the prevalence of secret meetings and inflammatory proclamations presaged a seditious conspiracy".

[2] In an atmosphere of panic and conspiracy, Prescott cracked down against perceived insurrectionists, resulting in the trial and execution of American merchant David McLane as a French spy.

[2] This satisfied the majority of applicants, but angered speculators, as it limited their ability to profit from merely holding title to lands in Canada.

[2] The Executive Council condemned Prescott's attempted solution to the land issue, leading him to believe that his suspicions had been confirmed.

A military figure who was unaccustomed to politicking and perceived insubordination, Prescott lashed out against councillors, openly accusing them of land speculation and jobbery.

[2] In April 1799, attempts at reconciliation failed, and the British government recalled Prescott to England, despatching Sir Robert Milnes, 1st Baronet as lieutenant governor to manage Lower Canada in his absence.

[2] After his return to England, Prescott endeavoured for some time to have an official inquiry made into his recall in order to exonerate himself.