If the external wall is decent and flat I would advise direct fix with no battens. If appearance (of the fixings) is an issue, consider stainless cladding screws. These are authentic and most think add to the look.
If you must batten, add a vapour barrier to the battens before fixing the pallet wood. (the external wall - internal wall is fine)
Tongue-Tite® Plus Screws, Cladding Fencing Stainless Steel Screws 3.5x32mm x 200 | eBay
For those that have never heard of the TDCA, they are an independent technical and advisory body that operates on a not for profit basis. With their expert knowledge, they provide advice and guidance on how to correctly specify and install timber decking and cladding.
www.ebay.co.uk
If you must batten, add a vapour barrier to the battens before fixing the pallet wood. (the external wall - internal wall is fine)
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