Problem solved!

the problem was not using the correct name in my flyway.conf

flyway.url=jdbc:sqlserver://localhost:1433;databaseName=${DB_NAME};TrustServerCertificate=True;

this configuration was incorrect, and instead should have been:

flyway.url=jdbc:sqlserver://database:1433;databaseName=${DB_NAME};TrustServerCertificate=True;

I needed to use database from the docker-compose because thats what the database configuration was configured to use.