Rename 'kohana' to 'system' to conform to the Kohana filesystem layout. I'm comfortable with us not clearly drawing the distinction about the fact that it's Kohana.

system/config/database.php

@@ -0,0 +1,45 @@
+<?php defined('SYSPATH') OR die('No direct access allowed.');
+/**
+ * @package  Database
+ *
+ * Database connection settings, defined as arrays, or "groups". If no group
+ * name is used when loading the database library, the group named "default"
+ * will be used.
+ *
+ * Each group can be connected to independently, and multiple groups can be
+ * connected at once.
+ *
+ * Group Options:
+ *  benchmark     - Enable or disable database benchmarking
+ *  persistent    - Enable or disable a persistent connection
+ *  connection    - Array of connection specific parameters; alternatively,
+ *                  you can use a DSN though it is not as fast and certain
+ *                  characters could create problems (like an '@' character
+ *                  in a password):
+ *                  'connection'    => 'mysql://dbuser:secret@localhost/kohana'
+ *  character_set - Database character set
+ *  table_prefix  - Database table prefix
+ *  object        - Enable or disable object results
+ *  cache         - Enable or disable query caching
+ *	escape        - Enable automatic query builder escaping
+ */
+$config['default'] = array
+(
+	'benchmark'     => TRUE,
+	'persistent'    => FALSE,
+	'connection'    => array
+	(
+		'type'     => 'mysql',
+		'user'     => 'dbuser',
+		'pass'     => 'p@ssw0rd',
+		'host'     => 'localhost',
+		'port'     => FALSE,
+		'socket'   => FALSE,
+		'database' => 'kohana'
+	),
+	'character_set' => 'utf8',
+	'table_prefix'  => '',
+	'object'        => TRUE,
+	'cache'         => FALSE,
+	'escape'        => TRUE
+);