Brent Olthuis told a three-judge panel Friday that the lower-court judge focused on Cory Bird's sexual orientation, when he should have been examining the uninvited sexual contact from the victim.
In 2008, Bird claimed he woke up after a night of drinking and smoking marijuana with his friend Albert Michell to find Michell sexual assaulting him.
Bird told his earlier trial that he went into the kitchen to get a knife and started stabbing Michell in a "frenzied state," even stopping to switch weapons several times.
At his original trial, Justice Richard Blair said he wasn't satisfied with reasoning that the sexual advances would have caused Bird to lose his self control, given his previous sexual experiences with other men.
But Olthuis said the judge lost sight of the fact that the sexual contact was uninvited and unexpected.
"The justice erred in thinking consensual same-sex relationships in the past had any effect on this uninvited advance," said Olthuis.
The ruling stated that Bird "says that he is bisexual and, as such, appears to accept sexual contact with other males as a normal manifestation of his sexual makeup."
Michell had talked about his romantic relationships with women to Bird and there was previously no sexual relationship between the two men.
Bird and Michell met hitchhiking the month before the incident, and Bird went to visit his mother in Kamloops before returning to stay at Michell's house on the Siska Indian Reserve south of Lytton, B.C., for over a week.
He had intended to leave early the day of the incident but was persuaded to stay for a night of drinking with Michell and his neighbour Colin Gilker.
Gilker joined the two men for liquor, fried chicken and several movies before going home, leaving them to drink amaretto before Bird passed out.
Gilker later testified that neither of the men were overly intoxicated when he left.
The court heard that after the stabbing, Bird covered Michell's body in a sheet and stayed the night.
He fled to Montreal the next morning and when he was arrested there for leaving a restaurant without paying he confessed to murdering his friend.
Bird's story changed several times since the arrest.
He was sentenced to life in prison with no chance of parole for 12 years in 2011.
Judgement for Bird's conviction appeal has been reserved until a later date.