Solutions
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Slothy2406's post in Docker application config changes was marked as the answerOK,
Found my own solution
Adding a extra variable to the config of the docker application overrides any default settings, so I added the UPSTREAM_DNS setting and set the value to my PiHole. Docker restarted the application and hey presto! the dns is forwarding to the pihole.
I am not too sure if I can mark my own post as a solution or not.
Andy