Is familiar we hear with happy bunch... (7)
I believe the answer is:
Here is my best explanation:
'bunch' is the definition.
(I have seen 'Bunch of flowers ' mean 'nosegay' so perhaps 'bunch' could also mean 'nosegay')
'is familiar we hear with happy' is the wordplay.
'is familiar' becomes 'knows'.
'we hear' shows a homophone (sound like).
'with' says to put letters next to each other.
'happy' becomes 'gay' ('gay' can be similar in meaning to 'happy').
'knows' is a homophone of 'nose'.
(Other definitions for nosegay that I've seen before include "pick of the bunch", "Posy of flowers", "Small bouquet", "Floral offering", "Small posy", "Fragrant posy", "spray", "bunch of pansies?", "Scented bunch of flowers" and "Flowers".)