Pg.9 (under Exceptions)
'At other times, you'll find that both players have to do something at the same time. When these things happen, the player whose turn it is decides the order in which the events occur'
Challenges and
MSS are things that happen at the same time. This rule states that active players turn determines the order in which these happen.
In your example above, if you charged, then you get to pick whether the challenge or
MSS happens first. Since it's your turn, you choose to issue the challenge, move the model in base contact, then activate the
MSS. On his turn he can choose to have you use
MSS first, even if there are no models in base contact with any Lords carrying them making them useless, and then issue the challenge. He should give you the opportunity to use them, but isn't required to. Many arguments have been started where players will often try to use them after issues are challenges because his opponent didn't say, 'Are you going to use your
MSS now?'
It's one of the ways players get around
MSS, and why using them on the first turn of any combat can be tricky.
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If in a challenge, the model that fails the
MSS test, will hit himself. (Necron
FAQ)
This is one of the reasons they're feared more now that we know they hit themselves.
EDIT: Since you are a Necron player, feel free to PM me about MSS if you want to know the 'other' things about MSS to help you decide if you want to take them. It's kinda long, and not on topic so Im not gonna post em here.