You should have rejected such an unfair proposal.

Literal

Such-kind unjust proposal [topic-は], reject-must-was [contrastive-のに].

The pattern [verb-base]+べき+だった ('should have X-ed') + ending のに ('and yet'). べき ('should, ought to') is a classical/formal modal expressing obligation. The trailing のに at the end isn't the temporal 'while' — it's the regretful/contrastive 'and yet,' often left dangling: 'you should have... [but you didn't, and now look].' A nicely complete-feeling unfinished sentence.