Not honoring warranty

I bought my iPod nano from a major distributor in South Africa. Incredible connection. After 3 months noticed the LCD turning bluish in color. Took it back to them because its under warranty. They refuse to honor the warranty and say that this is a result of liquid damage. They device is still working. Haven't dropped it in any liquid. Only use it in gym and haven't used it negligently or misused it. To me the product is defective and should be replaced. They want R1500 to fix the device. Very unhappy. Feel very cheated and will never buy anything from this company again as well as make sure none of my family and friends buy from these ******* again.