if i put that wood panelling stuff in bathroom and put it directly behind sink with no tiles as a splash back-will the bathroom paint u can buy be waterproof enuff so wood dont get wet or does it still need a layer of varnish over top-yes or no?

Always better safe then sorry I think, I recently did the whole bathroom, floor, bath panel and round the sink. Painted all in bathroom paint and finished with Plasti-kote clear acrylic spray.